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Know Your Profits, Fuel Your Growth. Calculate your Shopify stores net profit margin in seconds and scale smarter.
E-commerce net profit margins typically fall into these categories:
The average net profit margin for e-commerce is about 10%. If yours is over 20%, you're ahead of most businesses—well done!
Important note: Remember, these are just averages. Your margin may vary based on your industry and business model.
TrueProfit automates accurate and real-time profit tracking so you can focus on scaling without going back and forth manual calculation or spreadsheet. With a 360-degree view of your finance, you can make profit-driven decisions with confident.
Popular questions about Shopify profits and profits calculation.
E-commerce niches like luxury goods and digital products offer high margins. Dropshipping is also profitable due to low costs.
Unlikely. A 100% profit margin would mean selling a product for double the cost with no costs. However, in practice, this is highly unlikely due to operational costs like marketing, shipping, and taxes. A 100% margin usually refers to markup, not actual profit.
An 80% profit margin is excellent, especially for high-margin industries like digital products. However, it’s rare in sectors with high overhead costs such as retail or manufacturing.
A 7% profit margin is on the lower end but still profitable for businesses in high-volume industries, like retail. However, for e-commerce, businesses should aim to improve this margin over time.
Product profit depends on your industry and cost structure. Most e-commerce businesses aim for a profit margin between 10-30% on products. For optimal profitability, businesses should strive for higher margins where possible.
Retail margin is calculated by subtracting the cost of goods sold (COGS) from the selling price, then dividing by the selling price and multiplying by 100.
Formula: Retail Margin (%) = (Selling Price - Cost of Goods Sold) / Selling Price × 100
Markup is calculated by subtracting the cost price from the selling price, dividing that by the cost price, and multiplying by 100.
Formula: Markup (%) = (Selling Price - Cost Price) / Cost Price × 100
Profit refers to the actual earnings a business makes after deducting all costs, taxes, and costs. Margin refers to the percentage of revenue that exceeds the cost of goods sold, which indicates the business's profitability. Profit is an absolute figure, while margin is a percentage.
A 30% profit margin is considered high and generally indicates excellent control over pricing and costs. While this margin is ideal for some industries, the ""ideal"" profit margin depends on your business model and industry sector.
Gross profit shows how much money is left after covering product costs, but it doesn’t account for costs like ads, shipping, or taxes. Net profit goes deeper, revealing your true earnings after all costs. Tracking net profit is crucial to understand your real financial health and make profit-focused decisions.
Not necessarily. A business can make millions in revenue but still lose money if costs are higher than the revenue. Hence, net profit shows what you actually earn - it’s the real measure of success.