Every example and amount on this page is illustrative. It shows the method and is not a benchmark, a quote or advice.
What TrueProfit Is Actually Measuring
TrueProfit is measuring a contribution-profit view of your store, not your company’s accounting profit. It starts with store revenue and adjusts that view for refunds, product costs, marketing spend, transaction fees, shipping, and other expenses you configure. The result answers a practical operating question: after the costs directly associated with selling and acquiring an order, what contribution remains?
That makes the number useful for comparing products, channels, campaigns, and periods. A product can generate substantial revenue while contributing little after its landed product cost, payment fees, shipping, and advertising are included. For a closer look at the same unit economics, see how to calculate product profitability after COGS, returns and ad spend.
Contribution profit is not the same as accounting profit. Accounting profit may also include salaries, rent, software subscriptions, warehouse overhead, insurance, depreciation, interest, taxes, and other fixed or non-operating costs. Those items only affect TrueProfit’s result if they are included through the expenses you configure. Therefore, a positive TrueProfit figure does not automatically mean the business is profitable under its income statement.
It is also not the same as cash in the bank. Cash reflects payment settlement timing, supplier bills, payroll, tax payments, inventory purchases, financing, refunds in transit, and transfers between accounts. An order can contribute positively in the dashboard while its payment has not settled, or while the business is short of cash because it bought inventory upfront. Treat TrueProfit as an operating decision metric: a view of what sales contribute after selected costs, rather than a bank balance or a statutory profit figure.
| Measure | What it tells you |
|---|---|
| TrueProfit contribution view | What remains from store revenue after the costs included in its configuration |
| Accounting profit | Profit after the full set of business expenses required for financial reporting |
| Cash in the bank | The amount currently available after settlement timing, bills, inventory, taxes, financing, and other cash movements |
The Profit Formula in Plain English
The calculation is straightforward: net sales − product costs − marketing costs − payment and selling fees − shipping − operating expenses − other included costs = profit. The result is only as reliable as the definition of each input and the orders included in the period.
Net sales is the revenue left after the sales adjustments included in your setup, such as discounts, refunds, or returns. Product costs are the cost of the items sold—the COGS input. Subtracting them gives the amount available to cover everything else. If a product sells for $50 and its product cost is $20, that order contributes $30 before advertising, fees, shipping, and overhead. The product profitability calculation follows this same logic at item level.
Marketing costs include the advertising spend assigned to the period or product. Payment and selling fees cover charges from payment processors, marketplaces, or selling channels. Shipping includes the fulfilment or delivery cost you choose to track. Operating expenses can include software, payroll, rent, or agency costs; other included costs might cover customs, packaging, transaction adjustments, or custom expenses. Each dollar added to any cost category reduces the reported profit by one dollar. If a $100 order carries $25 in product cost, $15 in ads, $4 in fees, $8 in shipping, and $10 in operating or other costs, the result is $38 before any costs left outside the model.
That final qualification matters. A cost omitted from the formula does not disappear—it remains outside this profit view. A cost assigned to the wrong period, order, product, or currency can also make the number appear more or less profitable than the underlying trade. Treat the formula as a defined operating measure: document what each category includes, then apply it consistently when comparing products, channels, or months.
A Worked Example From Order Revenue to Profit
Take an illustrative 30-day Shopify period, with every amount in the store’s trading currency. The store records $100,000 in gross sales. It applies $8,000 in discounts and issues $5,000 in refunds, so the revenue available for the profit calculation is $87,000—not the $100,000 headline sales figure.
Product costs for the orders sold total $26,100, leaving $60,900 in gross profit. The store spends $18,000 on advertising, pays $2,610 in payment fees, incurs $6,200 in shipping and fulfilment costs, and allocates $9,000 to operating overhead. Each item is subtracted once, using the period’s actual values.
The resulting profit is $25,090. The margin is $25,090 ÷ $87,000 = 28.84%. This is a contribution-style operating view for the period: it tells the operator how much remained after the listed costs, while the result still depends on which overhead and custom costs were included.
| Step | Calculation | Amount |
|---|---|---|
| Gross sales | Starting sales value | $100,000 |
| Discounts | $100,000 − $8,000 | $92,000 |
| Refunds | $92,000 − $5,000 | $87,000 net sales |
| Product costs (COGS) | $87,000 − $26,100 | $60,900 gross profit |
| Advertising | $60,900 − $18,000 | $42,900 |
| Payment fees | $42,900 − $2,610 | $40,290 |
| Shipping and fulfilment | $40,290 − $6,200 | $34,090 |
| Operating overhead | $34,090 − $9,000 | $25,090 profit |
| Profit margin | $25,090 ÷ $87,000 | 28.84% |
How to Set Up the Inputs for a Trustworthy Number
A trustworthy TrueProfit number starts with a complete source list, not the dashboard total. Connect the Shopify store that holds the orders, then verify the reporting currency, store timezone, order-status rules and date range. Connect every advertising account that spent money for that store, including separate Meta, Google, TikTok, Pinterest or agency accounts. If one account covers several stores or brands, confirm that only the relevant campaigns and spend are included.
Enter product cost at the variant level where possible. Use the amount actually paid to manufacture or buy the item, not its selling price. For landed cost, include freight, customs, duties, inspection and other costs required to get inventory into sellable stock. For a product costing $12 ex-factory with $3 freight and $1 duty, the landed cost is $16. Document whether packaging is included, and keep the method consistent across products. For bundles, map the bundle price back to its component products so a $60 bundle containing items with costs of $20 and $10 carries $30 of product cost rather than an arbitrary bundle estimate.
Review payment-processing, marketplace, transaction, app and fulfilment fees against actual statements. Add recurring expenses that belong in the operating view—such as software, agency retainers, storage or warehouse fees—and define whether they are allocated by month, order, revenue or another rule. Do not add sales tax or VAT to profit as revenue when the store collects it for a tax authority; likewise, decide whether shipping charged to customers is revenue and whether shipping expense is recorded separately.
Returns need an explicit policy. Check whether returned or cancelled orders are removed from revenue, whether refunded shipping and payment fees are reversed, and whether returned inventory is treated as reusable stock or a loss. Finally, reconcile the dashboard to a fixed period using the same timezone and order-date basis as Shopify, ad platforms and payment statements. An order placed just before midnight, an ad charge posted the next day and a refund processed later can all land in different periods. Compare one month line by line before relying on daily or campaign-level profit.
- Save a short input register: source account, currency, timezone, product-cost method, fee treatment, tax treatment, return rule and period owner.
- Reconcile revenue, ad spend, fees and refunds to source statements; investigate any unexplained difference instead of forcing the figures to match.
- For a deeper product-cost framework, see How to Calculate Product Profitability After COGS, Returns and Ad Spend.
The Mistakes That Make Profit Tracking Wrong
A missing cost makes the reported profit look better than the cash reality. Common omissions include fulfillment, packaging, storage, subscriptions, agency fees, duties, chargebacks and transaction fees. If a $100 order carries $42 of product and fulfillment cost but only the product cost is included, the dashboard overstates contribution by $8 on every order.
Duplicate imports create the opposite problem. The same Meta spend, Shopify fee or shipping charge can enter through both an integration and a manual custom-cost entry. A $12,000 monthly ad bill imported twice removes an extra $12,000 from profit. Check the source, date range and import method before adding a manual adjustment.
COGS must match what was actually sold during the period. A product cost entered at $18 remains wrong after the supplier raises it to $21, and a bundle may inherit an incorrect component cost. That $3 difference across 4,000 units reduces reported profit by $12,000. Review costs whenever suppliers, packaging or product configurations change. Product profitability analysis depends on this mapping being current.
Gross revenue and net revenue are not interchangeable. If gross sales include discounts, refunds, returns or cancelled orders but the cost side uses only completed sales, margins become distorted. Attribution creates another gap: untracked ad accounts or campaigns leave spend out, while attributed revenue is not the same as total store revenue. Keep total store economics and channel attribution as separate checks.
Finally, compare like with like. A Shopify report in store time versus an ad platform report in account time can place the same order and spend in different days. Month-end cutoffs, delayed refunds and partial periods produce the same issue. Use one timezone and identical start and end dates, then reconcile order count, revenue, refunds and ad spend before trusting the profit change.
What to Do With the Answer
Validate the number before using it to change spend. Pick one closed period and keep the date range, store, trading currency, order status and refund treatment consistent. Start with Shopify: reconcile order count, net sales, discounts, refunds, cancellations and shipping revenue. Any difference should be explainable by timing, exclusions or currency conversion—not treated as noise.
Then compare advertising costs with each ad platform’s invoice or billing export. Check whether TrueProfit is using spend by transaction date, account timezone or invoice period, and whether campaign-level totals include tax or credits. Reconcile payment processors separately: processor statements should explain fees, refunds, chargebacks and payout timing. Finally, compare the same period with bookkeeping records. Accounting may be accrual- or cash-based, while a store dashboard may assign costs to an order or service date.
Once the variance is documented, use contribution profit and margin—not revenue alone—to make decisions. A channel producing $30,000 in sales at a 12% contribution margin contributes $3,600; another producing $20,000 at 25% contributes $5,000. The second channel may deserve more budget even with less revenue. Product-level economics can expose items that need a price test or promotion, while margin by collection can guide assortment and inventory attention. For a practical framework, see how to calculate product profitability after COGS, returns and ad spend.
Keep the validated view separate from accounting profit, then review it on a fixed cadence. ORVX can provide a second operating view with realized revenue from delivered orders, product and collection contribution after advertising, customer profitability, inventory position and return rates. It also keeps trading currencies separate, reducing the risk of making a budget or channel decision from a mixed-currency figure.
- Record each reconciliation difference: timing, refund status, fee treatment, missing cost or currency conversion.
- Do not scale a channel until its spend, attributed revenue and contribution margin reconcile to the same period.
TrueProfit can provide a useful operating view of ecommerce profitability, but the result is only as reliable as the cost data and definitions behind it. Reconcile the calculation regularly, document what is included, and use it alongside accounting records rather than treating one dashboard figure as the final financial statement.
General information only: tax, duty and import rules change and depend on your situation, so check with an accountant or the official source before acting.