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Net Profit — The amount of money left over after subtracting every business cost from revenue, not just the cost of the product.
What Is Net Profit?
Net profit accounts for everything: product cost, shipping, ad spend, software subscriptions, payment fees, and taxes. It’s the number that actually tells you whether a store is making money, not just selling products.
How to Calculate Net Profit
Formula: Revenue − All Costs (product cost, shipping, ad spend, fees, subscriptions, and taxes).
Net Profit vs. Gross Profit
| Net Profit | Gross Profit | |
|---|---|---|
| Includes | All costs, including operating expenses | Only the direct cost of the product |
| What it shows | True bottom-line profit | Profit before overhead |
Why Net Profit Matters for Dropshippers
It’s easy to track gross profit per sale and feel profitable, while recurring costs like apps, ad platform fees, and subscriptions quietly eat into what’s actually left over. Net profit is the number that catches that gap.
FAQ
What's the difference between net profit and gross profit?
Gross profit only subtracts the cost of the product itself, while net profit subtracts every business cost, including ad spend, software subscriptions, and fees.
Why can a store have high revenue but low net profit?
Revenue doesn’t account for costs at all — a store can bring in a lot of sales and still end up with thin or negative net profit once every expense is subtracted.
How often should I calculate net profit?
Monthly is a common cadence for most small stores, since it’s frequent enough to catch problems early without being overwhelming to track.