Gross vs Net Profit

Understanding the difference between gross and net profit is essential for managing your ecommerce business.

Gross Profit

Gross profit is your revenue minus the direct cost of goods sold.

Gross Profit = Revenue - COGS

What's Included in COGS

• Product purchase cost
• Shipping to your warehouse
• Import duties and tariffs
• Direct manufacturing costs

Gross Profit Example

Net Profit

Net profit is what remains after ALL expenses are deducted.

Net Profit = Revenue - COGS - Operating Expenses

What's Included in Operating Expenses

• Outbound shipping
• Payment processing fees
• Marketing costs
• Platform fees
• Packaging
• Returns and refunds
• Staff costs
• Software subscriptions

Net Profit Example

Why Both Matter

Gross Profit Tells You:

• Is your pricing sustainable?
• Are your supplier costs competitive?
• Which products have the best margins?

Net Profit Tells You:

• Is your business actually profitable?
• Are your operating costs under control?
• How much cash are you generating?

CostSync and Profit

CostSync primarily tracks Gross Profit at the order level by calculating COGS.

For Net Profit, you can add expenses to include:

• Shipping costs
• Transaction fees
• Marketing allocations

Margin Comparison

Best Practices

1. Track both - Gross profit for product decisions, net profit for business health
2. Know your break-even - Understand minimum margin needed to cover operating costs
3. Review regularly - Check margins monthly at minimum
4. Benchmark - Compare to industry standards