What is Gross profit?

Gross profit tells a Shopify owner whether the core business of buying and selling products actually makes money, separate from overhead. If gross profit is thin, discounts, shipping costs or supplier price increases can quietly turn a busy month into a loss.

Check gross profit by product or category, not just overall. A store can have strong total revenue while one line of products barely breaks even, and spotting that early lets you fix pricing or drop the weak line before it drags down the whole store.

Formula

Example

A candle store sells 200 candles in a month at $20 each, for $4,000 in revenue. Each candle costs $8 to make and source, so cost of goods sold is 200 x $8 = $1,600. Gross profit is $4,000 - $1,600 = $2,400.

Common mistakes

• Confusing gross profit with net profit by forgetting to subtract operating expenses later.
• Leaving out costs like inbound shipping or packaging when calculating cost of goods sold, which overstates gross profit.
• Looking only at total gross profit and missing that some SKUs are unprofitable once discounts are applied.

Gross profit and SteadyShelf

SteadyShelf does not calculate gross profit, but by tracking lead times and suggesting order quantities it helps you avoid the markdowns and rush shipping fees that quietly eat into gross profit.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Gross margin · Cost of goods sold · Contribution margin · Markdown · Revenue per SKU

Full inventory glossary

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