Gross Margin vs Net Margin: The Costly Confusion
Gross margin is the difference between the selling price and the product's purchase cost. It's the calculation most PrestaShop merchants use, often unconsciously, because it's the only one the back office allows via the wholesale price field. If you sell a product for $50 and your wholesale price is $20, your gross margin is $30, or 60%.
But this gross margin is a mirage. It doesn't account for any of the costs required to make that sale. The shipping you offer or subsidize, your payment provider's commission, your ad spend, return and refund costs, the operational costs of your logistics: all of this is ignored.
Net margin is what actually remains in your pocket after deducting all these costs. And the gap between gross margin and net margin is often considerable. A merchant who thinks they're operating at 60% margin sometimes discovers they're actually running at 15 to 20% net margin, or even less on certain products or orders. Without this visibility, you can't make informed decisions about your pricing, promotions, or advertising investments.
The Wholesale Price Trap in PrestaShop
PrestaShop offers a "wholesale price" field in the product sheet. In theory, this field lets you calculate gross margin per product. In practice, this field is poorly understood and poorly used by the majority of merchants.
First problem: the wholesale price is static. You enter it once and it doesn't change, even though your purchase costs vary by supplier, order quantity, exchange rates, and import fees. After a few months, the wholesale price in PrestaShop no longer reflects reality.
Second problem: many merchants simply don't fill in this field, or fill it in approximately. For stores with hundreds or thousands of SKUs, keeping this price up to date is a massive task that nobody does.
Third problem: even when the wholesale price is correct, PrestaShop only uses it to display an indicative margin on the product page. There's no global report that aggregates margins by order, by period, or by category. You have zero consolidated view of your profitability. The field exists, but it's virtually useless for day-to-day business management.
The 5 Hidden Costs PrestaShop Ignores
The first hidden cost is the cost of goods sold (COGS) beyond the simple wholesale price: packaging, labeling, order preparation. These unit costs add up and eat into your margin without PrestaShop accounting for them.
The second cost is shipping. Whether you offer free delivery or charge shipping fees, the real cost of transportation (what you pay the carrier) is rarely equal to what the customer pays. The difference, positive or negative, directly impacts your margin per order.
The third cost is transaction fees. Every credit card payment, PayPal, or other provider incurs a commission, typically between 1.5% and 3% of the amount. On a store doing $100,000 in revenue, that's $1,500 to $3,000 in invisible fees.
The fourth cost is advertising spend (ad spend). If you invest in Facebook Ads, Google Ads, or TikTok Ads to drive traffic, this cost must be attributed to the orders it generates. Without this attribution, you don't know if a campaign is truly profitable.
The fifth cost is operational: product returns, refunds, customer service, storage costs. PrestaShop offers no mechanism to integrate these costs into the profitability calculation of an order or product.
Manually Calculating Net Margin on PrestaShop
To calculate your net margin manually, you need to export your order data from the PrestaShop back office (Orders menu > Export) and work with it in a spreadsheet. For each order, you have the total amount, ordered products, and shipping fees charged to the customer.
Then you need to add cost columns. COGS: multiply each product's wholesale price by the ordered quantity. Real shipping costs: check your carrier invoices and associate the real cost with each order. Transaction fees: apply your payment provider's percentage to the total amount. Ad spend: divide your monthly ad budget by the number of orders, or use UTMs to attribute costs by campaign.
Net margin per order is then: order amount minus COGS, minus real shipping costs, minus transaction fees, minus attributed ad cost, minus estimated operational costs. Aggregate this data by month, category, or acquisition channel to get a view of your real profitability.
This process is technically feasible but extremely time-consuming. It requires regular updates, reliable data from multiple sources, and advanced spreadsheet skills. Beyond a few dozen orders per month, it becomes unmanageable without automation.
How Fullmetrix Automates Margin Calculation
Fullmetrix connects to your PrestaShop store via a module compatible with 1.7 through 8.x and syncs all your orders, products, and customer data. The platform integrates all 5 cost types into its profitability calculation: cost of goods sold (COGS), shipping costs, transaction fees, operational costs, and advertising spend.
You configure your costs once: your payment provider's commission rate, shipping costs by carrier, COGS by product or category, and fixed or variable operational costs. Fullmetrix then automatically applies these costs to every synced order, past and future.
The result is a dashboard that displays your real net margin per order, per product, per category, per period, and per acquisition channel. You can instantly see which products are truly profitable and which are losing money once all costs are accounted for. Data is updated in real time with every new order.
This visibility enables concrete decisions: adjust prices on low-margin products, stop promotions that destroy value, optimize shipping costs, and concentrate ad spend on the most profitable products and segments.
Optimizing Your Margin: Concrete Strategies
The first strategy is to revisit your free shipping policy. Offering free shipping above a certain threshold is a common practice, but the threshold is often set arbitrarily. By analyzing net margin per cart value bracket, you can determine the exact threshold above which free shipping remains profitable. If your net margin drops below 10% on orders with free shipping, your threshold is too low.
The second strategy concerns your promotions. A 20% discount on a product with 40% gross margin seems acceptable. But once transaction fees, shipping, and ad costs are deducted, that promotion can have you selling at a loss. Always simulate a promotion's impact on net margin, not gross margin.
The third strategy is optimizing your product mix. Fullmetrix's dashboards show you net margin by category and by product. Identify your high-margin products and feature them in your merchandising, email campaigns, and ads. Reduce the visibility of products that generate revenue but little or no profit. Revenue declining but profit increasing is always preferable to the opposite.