Shopshot shows three profit lines, and they are not the same. Using the right one for the right decision is the difference between a confident call and a costly one. Here is what each includes and when to reach for it.
The three lines
Line | Formula | What it answers |
Gross Profit | Net Sales − COGS − shipping cost − payment fees − fulfillment | Does the product itself make money after the direct cost of selling it? |
Contribution Margin | Gross Profit − Marketing Costs (ad spend + CAC) | Does the product still make money after what it costs to acquire the customer? |
Net Profit | Contribution Margin − Operating Expenses | What did the business actually keep after everything, including overhead? |
[Screenshot placeholder] The P&L statement highlighting the Gross Profit, Contribution Margin, and Net Profit rows
When to use which
Gross Profit / Gross Margin for product and pricing decisions. It isolates whether an item is fundamentally profitable before marketing.
Contribution Margin for scaling decisions. If a product's contribution margin is positive, spending more to sell it usually adds profit; if it is negative, more spend loses more money.
Net Profit for the bottom line. It is the figure you report and the one that pays you, after rent, software, salaries, and every other overhead.
Why per-product profit can differ from the dashboard
Store-level Net Profit includes store-wide items like Operating Expenses that are not tied to any single product. Per-product Net Profit covers each product's own costs (COGS, shipping, fulfillment, fees, and allocated marketing) and does not carry store-wide overhead. Both are correct at their own level. This is why the Products page and the P&L page can show different profit for the "same" thing.
Common questions
Which number should I quote to investors? Net Profit for the bottom line, with Contribution Margin to show unit economics before overhead.
A product has positive Gross Profit but negative Contribution Margin. What does that mean? It makes money on the product but loses it on acquisition. Either the CAC is too high or the price is too low. Fix one before scaling.
Why is Contribution Margin sometimes equal to Gross Profit? If no marketing cost is attributed in the period (for example no ad platform connected), there is nothing to subtract, so the two lines match.
Next step
See exactly how each line is built, step by step, in the calculation rules. → How Shopshot calculates profit (the honest math)
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