How to measure the profitability of an e-commerce store?
To measure e-commerce profitability, compute your net profit by deducting 5 cost categories from revenue: COGS, shipping, transaction, advertising and operational. The ideal net margin is between 10% and 20%.
Detailed explanation
Measuring the real profitability of an e-commerce store requires going beyond the simple revenue shown in Shopify, WooCommerce or PrestaShop. Gross revenue says nothing about profitability. To obtain a reliable net profit, you need to identify and subtract all the variable and fixed cost categories that weigh on each sale. Without this complete view, you risk scaling activities that lose money on every order.
The five cost categories to integrate are: COGS (cost of goods sold, including supplier purchase, import taxes, packaging), shipping fees (carriers, packaging, returns), transaction fees (Stripe, PayPal, platform commissions), advertising spend (Meta, Google, TikTok, influencers), and operational costs (salaries, rent, SaaS subscriptions, accounting). Each category must be correctly attributed to the relevant orders.
Once all costs are integrated, compute your net margin: Net margin = Net profit / Revenue × 100. A net margin between 10% and 20% is considered healthy in e-commerce. Below 5%, your business is fragile to cost or conversion variations. Above 20%, you have a comfortable margin that allows investing in growth.
The key complementary indicators to measure profitability are: profit per order, profit per acquisition channel, POAS per campaign, net LTV per customer cohort, and unit economics (how much each new customer earns beyond acquisition cost). A dashboard aggregating these metrics enables informed investment decisions and quick detection of drifts.
Concrete example
A store generates 100,000 EUR in revenue in October. Costs: COGS 45,000 EUR (45%), shipping 8,000 EUR (8%), transaction 2,500 EUR (2.5%), advertising 20,000 EUR (20%), operational 12,000 EUR (12%). Total costs: 87,500 EUR. Net profit: 12,500 EUR. Net margin: 12.5%. This store is profitable, with a healthy margin that allows investing in growth or building a cash reserve.
Related questions
What net margin to target in e-commerce?
A net margin between 10% and 20% is considered healthy. Below 5%, your business is fragile. Above 20%, you have a comfortable margin to invest.
How to calculate COGS precisely?
COGS includes supplier purchase price, import taxes, customs fees, packaging and preparation. It must be attributed to each product sold.
Should fixed costs be included in net profit?
Yes. Fixed costs (salaries, rent, SaaS) are part of net profit calculation. Without them, you only measure contribution margin, not actual profitability.
How to improve e-commerce profitability?
Optimize product margins, negotiate with suppliers, reduce CAC via SEO, increase AOV with cross-sell, and improve retention to increase LTV.
Why don't Shopify or WooCommerce show real profitability?
These platforms only show gross revenue without integrating external costs (advertising, transaction, operational). You need a dedicated tool to obtain the real net profit.
Related pages
Related questions
Guides
Measure your store's true profitability
Fullmetrix calculates your net profit by integrating all costs. Full P&L, net margin and channel analysis automatically.
14-day free trial. No commitment.