How to Calculate Profit in Business? (E-commerce Edition)

By Irene LeMay 11, 20255 min read
How to Calculate Profit in Business? (E-commerce Edition)
  • Gross profit is the money left after subtracting the cost of producing your product. 
  • Net profit is what’s left after all expenses, like rent, salaries, and taxes, are deducted.

trueprofit pnl dashboard
Example of gross profit, net profit and net profit margin. Source: TrueProfit demo store

  • Raw materials
  • Labor costs for production
  • Manufacturing expenses
  • COGS (already explained in gross profit)
  • Operating Costs: Rent, utilities, salaries, marketing
  • Taxes: Government taxes on income
  • Other Expenses: Interest on loans, insurance, etc.
  • Sales from products or services
  • Interest from investments
  • Other income like royalties or rental income
  1. COGS (Cost of Goods Sold): These are direct costs like raw materials, manufacturing, or production labor.
  2. Operating Expenses: These are ongoing costs like rent, utilities, payroll, and marketing.
  3. Other Expenses: This includes taxes, interest on loans, or one-time charges like legal fees.

TrueProfit profit tracker app

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Irene Le

Content Manager at TrueProfit & eCommerce Marketing Specialist

Irene Le is the Content Manager at TrueProfit, specializing in crafting insightful, data-driven content to help eCommerce merchants scale profitably. With over 5 years of experience in content creation and growth strategy for the eCommerce industry, she is dedicated to producing high-value, actionable content that empowers merchants to make informed financial decisions.

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