One of our goals with Report Toaster is to provide Shopify merchants with data they can't get from Shopify. When we do, we will write about it. This is the first installment in what we hope will become a series; Data You Can't Get From Shopify: Volume 1.
This version will cover gross profit and payment gateway transaction fees.
Product Cost and Profit
Report Toaster has introduced Product Cost into our dataset, which allows us to calculate gross profit.
Shopify tracks product cost, or cost of goods sold (COGS), by variant. See this Shopify article for instructions on adding cost to your products.
When cost is used in combination with the sales price for a product, the gross profit can be calculated. A few terms to be familiar with in order to understand profit calculations.
Net Quantity: The quantity of units sold less items returned for a particular product. For example, if a customer bought 3 of Item A and then returned 1, then the net quantity (calculated as 3 - 1) is 2.
Cost: The total cost of the units sold for a specific product. For example, if the product cost of Item A is $5 and the net quantity is 2, then the cost (calculated as 5 * 2) is $10.
Net Sales: The amount of sales minus refunds and discounts. For example, if the price of Item A is $11 and the net quantity sold is 2, then the net sales (calculated as 11 * 2) is $22.
Gross Profit: The amount of profit generated from the sale of a specific product. The profit is calculated as net sales less cost. For example, if the net sales of Item A is $22 and the cost is $10, then the gross profit (calculated as 22 - 10) is $12.
Gross Profit Margin: The profit margin on the sale of a specific product. The margin is calculated as ([net sales - cost] / net sales) * 100. For example, if your net sales are $22 and your cost is $10, then the gross margin (calculated as ([22 - 10] / 22) * 100) is 55%.
Unfortunately, Shopify reports do not track product cost at a specific point in time. Instead, if the product cost is updated for a specific variant, all Shopify reports will calculate profit based on the current cost. See the excerpt below from this article.
Report Toaster is one of those apps! All of our profit reports calculate using the cost at the time of an order, making them accurate at each point in time. See our knowledge base article to find out which pre-built reports use gross profit.
Payment Gateway Transaction Fees
We have also introduced Transaction Fees into our dataset. Allowing merchants to understand the NET amount earned from each sale.
Every time a customer places an order online, a merchant is accepting payment. Shopify allows payments to be accepted through Shopify Payments or a number of third-party payment providers or gateways. Here is a good article about getting paid for Shopify sales.
Regardless of which payment provider is chosen, the merchant will be responsible for fees to the provider for each transaction. The transaction fees are dependent on the payment provider itself, but normally include a flat fee and then a percentage of the sale. For Shopify Payments, PayPal, Stripe, and Authorize.NET the flat fee is 30 cents per transaction plus 2.9% of the purchase.
For example, if a merchant makes a sale via PayPal for $100, then the transaction fee (calculated as (100 * .029) + .3) is $3.20. There may be additional charges for currency conversions and other considerations on international sales.
Shopify reports do not expose these transaction fees to merchants. Instead, a merchant must reference their payment provider's system for payouts and associated fees. Meaning there is no single report that can provide the NET amount earned from each sale.
Luckily, Report Toaster is reporting transaction fees. We are currently including fees for payments processed via Shopify Payments and Paypal. With plans to add more payment providers in the future. Check our knowledge base article to find out which pre-built reports include transaction fees.
We hope you enjoyed our first installment in the series. Stay tuned as we uncover more hidden Shopify data. In the meantime, feel free to read about other ways that Report Toaster improves upon Basic Shopify Reports.