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Product margin is what’s left of your list-price sales after you pay for the products themselves:
Product Margin = Gross Revenue − COGS
Gross Revenue is line-item price × quantity, before discounts and refunds, without shipping or tax. COGS is the product cost of those same line items. In the Upstack app these metrics appear under the Gross Profit name, for example Gross Profit, Gross Profit % (of Gross) and Gross Profit Per Order.

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What product margin tells you

Product margin answers one question: how well do your prices cover what your products cost? Discounts, refunds, shipping and payment fees don’t touch it. That makes it the right number for pricing and product-mix decisions, and the wrong number for judging whether a month was profitable. The gap between product margin and CM1 is mostly your discounting and refunds. CM1 starts from Net Revenue and also subtracts other COGS-category costs from Cost Settings.

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Worked example

One order: two candles listed at $60 each, product cost $22 each, with a 20% discount code. The product makes a healthy 63% margin at list price. The discount takes 9 points off that before shipping or fees.

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How Upstack finds product cost

For each line item, Upstack uses the first cost it finds, for the date the order was placed:
  1. A cost you entered for that variant under Product costs in Cost Settings.
  2. The Cost per item synced from Shopify for that variant.
  3. Your Default COGS % applied to the line item’s price.
If none of these exists, the line item has no product cost and its product margin equals its sales. Set a Default COGS % so no order is missing a cost. See Cost Settings for effective dates and how edits apply to past orders.

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Which metric to use

New and returning splits use Upstack’s customer classification: a customer’s earliest non-cancelled order in your store is their first order, and every later order is a repeat order.