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Guide · online store profitability · by John Kiskipelis
Online store profitability: what is really left from each order
Online store profitability is what is left from each order after you subtract the product, shipping, payment and marketplace commissions, returns and advertising — and, at the end of the month, the fixed costs. Revenue says how much you sold. Profitability says whether it was worth it. This guide, written by John Kiskipelis, shows how it is calculated step by step, what ROAS you need to avoid losing money, the seven mistakes that hide the loss, and three tools to measure it in your own store today — in Greece or anywhere else.
Revenue, margin, profit
What online store profitability is — and why it is not revenue
Three numbers that often get mixed up in the same conversation. While you talk about the first, the other two can get worse without you seeing it.
Total sales as the store’s dashboard shows them, usually with VAT included. The number that gets announced and the least useful for decisions: two stores with the same revenue can have profit in one and a loss in the other.
Revenue without VAT, minus the cost of the product. The first number you need to know per product and per category — not as an average — because everything else is paid out of it.
Gross margin minus shipping, packaging, commissions, returns and the advertising cost it took to bring that order. This is the number that decides whether your store is growing or only its revenue is.
The calculation
The six costs that sit between the order and the profit
In this order, from the order downwards. Most stores know the first two; the other four are where profit disappears without showing.
1 · VAT: work with net revenue
The amount you see on the order is not all yours. Subtract VAT before any calculation, otherwise every margin you compute is inflated.
2 · Cost of the product
Purchase or production, transport to your warehouse, duties if you import. Per SKU, not an average: the average hides the products you sell at a loss.
3 · Shipping and packaging
What you pay the courier minus what you charge the customer — plus the box, the materials, the time. “Free shipping” is not free; it is a cost you moved from the charge line to the profit line.
4 · Commissions: payments and marketplaces
Card, PayPal, cash on delivery, instalments — every payment method has its own cost. And if the order came from Skroutz or another marketplace, the sales commission goes here, per channel.
5 · Returns and undelivered parcels
The product that comes back cost shipping twice, may not sell as new again, and the cash-on-delivery parcel that was not collected cost money and brought nothing. Measured as a percentage per category and per payment method.
6 · Advertising per order
The month’s total ad cost divided by the orders it brought — or, better, per channel. This is the cost most stores look at as ROAS and not as money per order, which is why they underestimate it.
And then: the fixed costs
What is left from all the month’s orders pays salaries, rent, platform, tools, accountant. Profit per order times the number of orders has to clear that line — otherwise revenue rises and the business loses.
How much ROAS you need to avoid losing money — the calculation in four steps
From the order’s net revenue subtract product, shipping, commissions and the return rate. What is left, as a percentage of revenue, is the contribution margin before advertising.
If the contribution margin is 40%, the ROAS at which advertising neither earns nor loses is 1 divided by 0.40, that is 2.5. With a 25% margin the threshold is 4. With 20% it is 5 — and a ROAS of 4 that “looks good” is a loss.
Break-even is not a target, it is the floor. The ROAS target per category goes well enough above the threshold to leave profit that also pays the fixed costs — and it differs per category, because the margin differs.
A ROAS that comes from customers who would have bought anyway is not worth the same as one from new customers. To see it with your own numbers: ROAS calculator →
The mistakes
The seven mistakes that hide an online store’s loss
We see them in stores of every size, often in businesses with a good product and a lot of work. None of them shows in the sales dashboard — all of them show at the accountant’s, six months later.
An average margin
A “30% margin” for the whole store hides categories at 10% that sell a lot because they are cheap — and are financed by the rest. Margin is measured per category, and advertising is split accordingly.
The platform’s ROAS as the truth
Google and Meta attribute to themselves sales the other channel may also be counting, and sales from customers who would have come anyway. The only truth is the store’s orders against the total advertising cost.
Cash on delivery without the cost of undelivered parcels
Cash on delivery brings orders — and undelivered parcels that cost shipping twice and froze stock. If you do not measure the undelivered rate per payment method, the “cheapest” channel may be the most expensive.
A discount not measured against margin
A 15% discount on a product with a 35% margin does not cut profit by 15%; it cuts it almost in half. Offers are designed on margin, not on price.
Free-shipping threshold in the wrong place
If the threshold is below the average order value, you give away shipping on orders that would have happened anyway. The threshold goes slightly above the average order, to raise the basket and not only the cost. More on a site that sells: CRO for online stores →
A marketplace eating your own store
A cheaper price on the marketplace than on your site means your own customers buy where you hand over commission. What costs what, where, is a profitability decision — see marketplace management →
Measuring once a year
The profitability checked in the annual accounts has already happened. It is measured every month, per category and per channel, with the same numbers the accountant will see — otherwise decisions are taken on revenue.
How to measure your store’s profitability every month — without an accounting degree
Net revenue, product cost, shipping, commissions, returns, advertising — per product category and per sales channel. A spreadsheet is enough; the difficulty is not the tool, it is collecting the numbers from the same places every month.
The same product leaves a different profit from the site, from Skroutz, from Meta. Once you see it per channel, budget allocation stops being a debate and becomes arithmetic.
Once a quarter, your numbers next to theirs. If they do not agree, a cost is missing from your sheet — usually returns, payment fees or advertising paid with another card.
The sheet exists to answer three questions: which category gets more advertising, which gets less, and which should change price or go. If nothing changes every month, it is not needed. In which order the channels go: promoting an online store →
Examples
When profitability comes first, the numbers change — with names
The clients' own numbers, for the period each case study describes. All case studies →
E-commerce Profitability Audit
Where your store loses profit, across six areas — UI/UX, advertising, business model, legal compliance, Skroutz, payments and shipping. The report is delivered in writing, in about 15 days.
Profitability Audit →Ecommerce consulting
If the question is strategic — product mix, pricing, channels, marketplace — John Kiskipelis works it through with you, by the hour or monthly.
Ecommerce consulting →eShop Profitability Index
A few-minute test: where your store stands on the basics of profitability (in Greek).
Take the test →ROAS calculator
Calculate the break-even ROAS with your own margin and your own costs.
Open the calculator →Performance marketing agency
Advertising measured on margin, not on revenue — by the UpCommerce team.
Performance marketing →The next step
Start with your own store, today
If you do not know where to begin: put your margin into the ROAS calculator → and see whether your advertising clears the threshold. If you read Greek, the eShop Profitability Index → shows in a few minutes which of the six areas needs attention first.
If you want someone to do it with you, on your own data: the team’s Profitability Audit → answers it in writing, and for the strategy behind the numbers there is John Kiskipelis’s ecommerce consulting →, as a separate engagement.
Frequently asked questions about online store profitability
What is online store profitability?
It is what is left from sales after the cost of products, shipping and packaging, payment and marketplace commissions, returns and undelivered parcels, advertising, and the business’s fixed costs are subtracted. It is measured per order, per category and per channel — not as one number for the whole store.
What is the difference between revenue and profit?
Revenue is total sales. Profit is what is left after all costs are paid. Two stores with the same revenue can have profit in one and a loss in the other, depending on product margin, advertising cost per order and shipping. That is why revenue is not a measure of success on its own.
How do I calculate break-even ROAS?
Find the contribution margin: net revenue minus product, shipping, commissions and returns, as a percentage of revenue. Break-even ROAS is 1 divided by that percentage. With a 40% margin the threshold is 2.5; with 25% it is 4; with 20% it is 5. Below that, every euro of advertising loses — however good the number looks in the platform.
What is a “good” margin for an online store?
There is no single number for everyone: it differs by industry, product category and sales channel. What matters is to know it per category and not as an average, and to split advertising and offers based on it. A store with a low margin but correct measurement beats one with a high margin that does not measure it.
Does free shipping hurt profitability?
Not on its own — the wrong threshold does. If the free-shipping threshold is below the average order, you pay shipping on orders that would have happened anyway. If it is slightly above it, it raises the basket and the cost is absorbed by the larger margin. The threshold is decided with your store’s numbers, not your competitor’s.
Does cash on delivery cost profitability?
Yes, in two ways: the cash-on-delivery fee and, mainly, undelivered parcels — orders the customer did not collect that cost shipping twice. The undelivered rate per payment method is one of the numbers most stores do not measure, and one of those that change the picture most once measured.
How do marketplaces affect profitability?
They bring customers who would not have found you otherwise and cost commission, often different shipping or returns too. The same order leaves a different profit on your site, on Skroutz or on another marketplace. It is measured per channel; if a category leaves no profit on a marketplace, it does not go up there — even if it raises revenue.
How do I know whether my store is profitable?
With a monthly sheet per category and per channel that reconciles with your accountant — not with the sales dashboard. For a quick picture, UpCommerce’s eShop Profitability Index (in Greek) shows in a few minutes which area needs attention first; for a full answer on your own data, there is the E-commerce Profitability Audit.
