Gross Profit
What's left of your sales once the goods themselves are paid for.
What it means
Gross Profit is Total Sales minus the cost of the goods you sold in the period — a euro total, not a percentage. Only product cost is subtracted: ads, delivery, payment fees and salaries are all still to come. It's the pot the rest of the business gets to spend.
Show the math
Formula and a worked example
Total Sales is everything you took in over the period, after discounts and refunds.
COGS is the cost of the units you actually sold — what you paid the supplier for them, not what's sitting in the warehouse.
Worked example. March brings €100,000 of Total Sales, and the units behind them cost you €40,000. Gross Profit = 100,000 − 40,000 = €60,000. Ads, postage, fees and salaries all come out of that €60,000.
Now run a 20% sale and take the same €100,000, but across more units. COGS climbs to €50,000, so Gross Profit falls to €50,000 — identical revenue, €10,000 less to work with, and the change never shows up in Total Sales.
It answers the question
Once you've paid for the stock, how much money is actually yours to run the business with? Everything below this line is spent out of this one number.
Why it matters
It's the ceiling. No amount of trimming ad budget or renegotiating carriers can produce profit that Gross Profit doesn't already contain, which is why sourcing and pricing move the bottom line harder than anything downstream.
It also drifts without warning. Supplier prices creep, freight lands in a later shipment, your mix tilts towards cheaper products — Total Sales read the same and Gross Profit is €8,000 lighter. Reading the euros next to Gross MarginGross MarginProfit after product cost; the ceiling on what you can spend to grow.60% or more is healthy tells you whether you sold less or each sale earned less.
What good looks like
There's no universal figure to hit. This is a euro amount, so it scales with the size of your shop and only means something against your own last few months at comparable sales. Read it as a percentage through Gross MarginGross MarginProfit after product cost; the ceiling on what you can spend to grow.60% or more is healthy, which is the version you can compare with your category: if sales grew 20% and Gross Profit grew 8%, the growth cost you something.
How to improve it
| Lever | What you do | Expect | How long | Watch out for |
|---|---|---|---|---|
| Fast Reprice the long tail | Raise prices on the slow-selling lines nobody comparison-shops | Gross Profit up with no extra units sold | 2–4 weeks | Some of those lines were quietly bought as add-ons. Lose them and average order value falls even as margin per unit rises. |
| Fast Stop discounting what already sells | Pull sitewide codes off your best sellers and keep the offers on slow stock | Gross Profit up 3–6% | 1 month | Discount-led buyers hesitate. Order count usually dips for a few weeks before the better margin per order makes up for it. |
| Slow Renegotiate landed cost on your top 5 SKUs | Take 12 months of real volume to your supplier and price the freight separately | Gross Profit up 5–10% on the same sales | 1 quarter | Better unit prices come with bigger minimum orders. Cash moves into stock that hasn't sold yet, and stale stock ends up discounted. |
| Slow Shift the mix towards what earns most | Feature the products with the widest gap between price and cost in bundles and on landing pages | Gross Profit rises on flat Total Sales | 1–2 quarters | Your widest-margin items are rarely your best-converting ones. Traffic sent there earns more per order and produces fewer orders. |
Every lever costs something somewhere. The last column is the one to read twice.
Read it with
A euro total can rise while every sale gets worse. Reading it against the percentage is what separates the two.
Earning more on every sale
Sales grew and each euro of them kept more. Pricing, sourcing or product mix moved your way — the one shape worth protecting.
Growth that cost you something
More money in total, thinner on each sale. Usually discounts or a tilt towards cheap products. Fine for a peak week, expensive as a permanent setting.
Smaller but sharper
Volume fell while the sales you kept were the good ones. A pricing win hiding inside a demand problem.
Both directions wrong
Fewer sales and less kept from each. Cost creep and falling demand at once — start with the costs, because that half you control.
The gap between them is what selling actually costs you — tax, delivery and ads. €60,000 of Gross Profit arriving as €20,000 of Contribution Profit means two thirds of your margin is spent getting the order out the door.
This pair says whether a fall came from the price you charged or the price you paid. Gross Profit down with discounts up by a matching share of sales is one answer; Gross Profit down with discounts flat sends you to your supplier instead.
Common misreads
It's a euro total. Sell 30% more units at a thinner markup and this rises while every individual sale earns less. Read Gross Margin beside it before you decide the month went well.
It doesn't. Only product cost is subtracted here. Ads, delivery and tax come out one line lower at Contribution Profit — which is why Gross Profit can look strong in a month you lost money.
It's the cost of the units you sold, not the stock you bought. A big restocking month doesn't dent this figure, and a month spent selling old stock doesn't flatter it.
Also called
Gross income · gross margin in euros · profit before operating costs
See yoursYour Gross Profit for the period, with the COGS behind it broken out underneath.
Open Shopify Profit →