Published 2026-07-14 · Keelvia blog

How to Calculate Net Profit for a Shopify Store

Net profit = total sales − COGS − transaction fees − shipping costs − ad spend − operating expenses. Shopify shows you the first number and hides the rest, which is why a store doing $20,000 a month can still lose money. This guide walks the exact calculation with a worked example, the margin benchmarks to aim for, and the mistakes that silently overstate your profit.

The full P&L, line by line

• Total sales — gross order value minus refunds and discounts. Use net sales, not GMV.
• COGS (cost of goods sold) — what you paid for the units you actually sold this period, including inbound freight and duties.
• Transaction fees — Shopify Payments or gateway fees, typically 2.4–2.9% + $0.30 per order, plus app subscriptions tied to checkout.
• Shipping — outbound labels, packaging, and the gap between what you charge and what carriers charge you.
• Ad spend — Meta, Google, TikTok. Count spend in the period it ran, not when the platform bills you.
• Operating expenses — Shopify plan, apps, contractors, software, your salary if you pay one.

Worked example

If you'd rather not rebuild this table by hand every week, the free Shopify profit margin calculator runs the same lines in your browser, and the net profit calculator covers the general case.

Three checkpoints matter, not one: gross margin tells you if the product economics work (aim 60%+ for DTC), contribution margin tells you if your marketing is affordable (aim 35–50%), and net margin tells you if the business pays you (10–20% is healthy for most Shopify stores; under 5% means one bad month erases a quarter).

The four mistakes that overstate profit

• Using platform ROAS as profit. A 4:1 revenue ROAS on a 40%-COGS product with fees and shipping is roughly break-even, not a win.
• Refunds counted as revenue. Shopify's COGS report can even credit COGS back on refunds that were never restocked, flattering your margin twice.
• Forgetting inbound freight. If landing the product costs 12% of its price, that belongs in COGS, not "somewhere later."
• Annual costs never amortized. Yearly app bills, insurance, and inventory write-offs hit real months even when your spreadsheet skips them.

Benchmarks move by category — returns dominate in apparel, shipping in coffee, sampling in skincare. Profit analytics by industry breaks down where each category actually loses margin.

How often should you check?

Weekly is the practical rhythm: revenue and ad spend move daily, but margins drift weekly. The stores that stay profitable treat the P&L as an operating dashboard, not a year-end report — every pricing change, shipping-rate change, and new hero SKU shows up in contribution margin within days if you're looking.