The profit remaining after subtracting cost of goods sold (COGS) from gross revenue.
| Metric | Definition |
|---|
| Gross Revenue | Total revenue from order line items before discounts and adjustments |
| COGS | Cost of goods sold based on product costs in Shopify |
| Metadata | |
|---|
| Type | Currency |
| Data Source | Shopify |
| Aggregation | Sum |
Example
Your store generated $85,000 in gross revenue with $42,500 in COGS:
| Period | Gross Revenue | COGS | Product Margin |
|---|
| January | $85,000 | $42,500 | $42,500 |
| February | $92,000 | $44,160 | $47,840 |
| March | $78,000 | $39,780 | $38,220 |
How It Works
Product Margin calculates the difference between what you charge customers and what you paid for the products. COGS is pulled from product cost data in Shopify. This metric represents your first layer of profitability before operational costs.
When to Use
| Scenario | Action |
|---|
| Evaluating product profitability | Compare margin across product lines or SKUs |
| Pricing decisions | Ensure prices cover costs and target margin |
| Supplier negotiations | Identify products where COGS reduction would have the biggest impact |
| Product mix optimization | Shift marketing toward higher-margin products |
| Metric | Relationship |
|---|
| Gross Revenue | Revenue component in the Product Margin calculation |
| COGS | Cost component subtracted from revenue |
| Contribution Margin | Product Margin minus additional variable costs |
| Net Revenue | Revenue after discounts and refunds |
