Net profit vs. Revenue: why your top line means nothing

Generating $100,000 in monthly revenue sounds impressive. But how much do you keep after expenses? If your net profit is $3,000, your margin rate is 3%. That's dangerous — the slightest cost increase can push you into the red.

The problem is that many e-commerce merchants focus on the top line (revenue) and ignore the bottom line (net profit). Social media amplifies this bias: people share revenue screenshots, not profit screenshots.

Here's the cascade of deductions between your revenue and net profit:

Gross revenue → − Refunds and cancellations → Net revenue → − Product cost (COGS) → Gross margin → − Shipping costs → − Payment fees (Stripe/PayPal) → − Platform fees (Shopify) → − Collected VAT → Operating margin → − Ad spend → Net profit

Each line eats into your margin. A typical e-commerce merchant loses 25-40% of revenue to COGS, 5-10% to various fees, and 15-30% to advertising.

Instead of watching your revenue, focus on these metrics:

Net profit per order: how much you actually earn on each sale, after ALL costs. This is the number that determines if your business is viable.

Net margin (%): your net profit divided by your revenue. Aim for at least 15-20% for a safety cushion.

Contribution margin: your margin before fixed costs (rent, salaries, tools). This tells you if each order contributes positively to your business.

Dayla connects to Shopify, Stripe, Meta Ads, and Google Ads to automatically calculate your real net profit. No more Excel spreadsheets or manual calculations. You see at a glance how much you're really making — per order, per day, per product.

The dashboard shows you the complete cascade: from gross revenue to net profit, with every cost line itemized. You immediately identify where you're losing margin and where you can optimize.