Gross Profit measures revenue minus cost of goods sold. It shows product-level profitability before operating expenses.
Gross Profit = Revenue − COGS
| Metric | Definition |
|---|
| Net Revenue | Revenue after discounts and refunds |
| COGS | Cost of goods sold for products |
| Metadata | |
|---|
| Type | Currency |
| Data Source | Shopify |
| Aggregation | Sum |
Example
Your Shopify store generated $100,000 in net revenue with $40,000 in COGS.
| Metric | Value | Calculation |
|---|
| Net Revenue | $100,000 | After discounts/refunds |
| COGS | $40,000 | Product costs |
| Gross Profit | $60,000 | $100,000 − $40,000 |
How It Works
Gross Profit is the first step in calculating contribution margin. It subtracts only the direct cost of products from net revenue. This metric is useful for understanding product-level profitability before any operating costs are applied.
When to Use
| Scenario | Action |
|---|
| Product profitability analysis | Compare gross profit across product lines |
| Pricing decisions | Ensure gross profit covers operating costs |
| Supplier negotiations | Understand COGS impact on profitability |
| Margin trend monitoring | Track gross profit over time |
| Metric | Relationship |
|---|
| NC Gross Profit | Gross profit from new customers |
| RC Gross Profit | Gross profit from returning customers |
| Gross Profit % (of Gross) | Gross profit as percentage of gross revenue |
| Contribution Margin | Gross profit minus variable costs |
