Why revenue is misleading
An e-commerce generating $100,000 in monthly revenue can be losing money. Without precise cost tracking, it is impossible to know if your business is truly profitable.
E-commerce CMS platforms (PrestaShop, WooCommerce, Shopify) display gross revenue but do not deduct costs. Result: many store owners make decisions (investing in ads, hiring, stocking) based on a number that does not reflect reality.
The first step toward profitability is to shift from revenue tracking to net profit tracking.
The 5 cost categories to track
To calculate your net profit, you must deduct 5 cost categories from your net revenue:
1. Product costs (COGS): purchase or manufacturing price of each item sold. This is typically the largest cost item (30 to 60% of revenue).
2. Shipping costs: expenses for delivering to the customer. Variable depending on weight, destination, and carrier.
3. Transaction fees: payment processor commissions (Stripe, PayPal) and platform fees (Shopify commission). Typically 2 to 5% per order.
4. Advertising costs: Meta Ads, Google Ads, TikTok Ads, and other paid channel expenses.
5. Operational costs: SaaS subscriptions, packaging costs, logistics labor, product returns.
How to identify your most profitable products
Best-selling products are not always the most profitable. A low-margin best-seller can generate less profit than a high-margin niche product.
For each product, calculate: - Unit gross margin (selling price - COGS) - Contribution margin (gross margin - shipping - transaction) - Net profit (contribution margin - share of ad and operational costs)
Focus your advertising budget on high contribution margin products and reduce visibility of negative or very low margin products.
Profitability indicators to monitor
Beyond total net profit, track these KPIs:
- Overall gross margin: minimum target of 50% to absorb other costs. - Net margin: target 10 to 20%. Below 10%, your business is fragile. - POAS (Profit on Ad Spend): profit generated per dollar spent on advertising. More relevant than ROAS. - Profit per order: detects unprofitable orders. - Contribution by channel: which marketing channel generates the most profit (not just revenue).
Fullmetrix automatically calculates these indicators by connecting your CMS and ad platforms.
Automating profitability tracking
Manual tracking via Excel or Google Sheets works at the start but quickly reaches its limits: outdated data, input errors, no product/order granularity.
A tool like Fullmetrix automates the process: - Syncing orders and costs from your CMS - Automatic import of advertising expenses - Net profit calculation per order, product, category, and period - Alerts when margin drops below a defined threshold
Result: you make decisions based on up-to-date data, not estimates.