Shopify profit margin calculator
Profit margin is a financial metric that measures the profitability of a business or a specific product or service by determining the percentage of profit earned from each unit of revenue generated and is a good indicator of your Shopify store’s health. To learn more about how much your Shopify store is worth, check out this blog post.
Gross margin definition: Percentage of revenue that exceeds the cost of goods sold. It measures the profitability of a company’s products or services before accounting for other operating expenses, such as marketing, administration, and research and development.
Net sales definition: Total revenue a company generates from the sale of its products or services after taking into account any deductions, such as sales discounts, returns, and allowances.
Cost of goods (COGS) definition: Direct costs incurred in producing or acquiring the goods or services sold by a company. COGS includes all the costs associated with the production or acquisition of a product, such as raw materials, labor, and overhead expenses.
How to calculate gross margin: (Net sales - COGS) / (Net sales) × 100
Ways to improve my store’s gross margin: Check out our blog posts on best practices for reaching profitability.
Net margin definition: Percentage of a company’s revenue that is left over after all expenses, including taxes and interest, have been deducted.
Net sales definition: Total revenue of a company generates from the sale of its products or services.
Cost of goods (COGS) definition: Direct costs incurred in producing or acquiring the goods or services sold by a company. COGS includes all the costs associated with the production or acquisition of a product, such as raw materials, labor, and overhead expenses.
Marketing expenses definition: Costs associated with promoting a product, service, or brand to potential customers.
Operating expenses definition: Costs incurred by a business to support its ongoing operations and generate revenue. These expenses are not directly associated with the production of goods or services, but rather with the day-to-day activities of running a business.
Interest definition: Cost of borrowing capital
Taxes definition: Business taxes paid to the government
How to calculate net margin: (Net Sales - COGS - Marketing Expenses - Operating Expenses - Interest - Taxes) / Net Sales × 100
Ways to improve my store’s net margin: Check out our blog posts on best practices for reaching profitability.
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