Revenue vs Profit: Why Your $50k Month Wasn't a $50k Month
Shopify's dashboard is very good at showing you one number, prominently, in large type: total sales. It is the most motivating number in your business and also the least useful one.
Here's what sits between it and money you can actually spend.
What's the difference between revenue and profit?
Revenue is everything customers paid you. Profit is what's left after every cost of earning it.
For most Shopify stores the gap is far larger than owners expect — commonly 70–90% of revenue disappears into costs before anything reaches you. A $50,000 month can quite normally be a $5,000 profit month, and that isn't a sign anything has gone wrong.
The problem isn't the gap. It's not knowing the size of it.
What comes out of Shopify revenue?
Roughly in the order they hit you:
1. Refunds and returns. Reported revenue usually includes orders that later came back. Your real top line is net of them.
2. Cost of goods sold (COGS). What you paid for the product. If you import, that includes freight, duty and customs — the landed cost, not the invoice price. Owners routinely under-count this by 15–30%.
3. Payment processing fees. Shopify Payments, PayPal, Afterpay, Klarna. Typically 2–3% plus a fixed amount per transaction, and buy-now-pay-later is usually materially higher — often 4–6%.
4. Shipping costs. What you actually paid the carrier, which is rarely what you charged the customer. If you offer free shipping over a threshold, this is often the single largest hidden cost in the business.
5. Advertising. Meta, Google, TikTok. For most stores the biggest variable cost after COGS.
6. Apps and subscriptions. Individually small, collectively not. Shopify plan, email platform, reviews app, page builder, and the rest.
7. GST. Not a cost exactly — you're collecting it for the government — but if you treat it as income you will spend it, and it isn't yours.
8. Everything else. Packaging, storage, contractors, software, accountant.
A worked example
A $50,000 month for a reasonably typical NZ store:
| Amount | |
|---|---|
| Gross sales | $50,000 |
| Less refunds (5%) | −$2,500 |
| Net sales | $47,500 |
| Less COGS (35%) | −$16,625 |
| Less payment fees (2.9%) | −$1,378 |
| Less shipping (8%) | −$3,800 |
| Less advertising | −$12,000 |
| Less apps and subscriptions | −$450 |
| Less packaging | −$900 |
| Profit before tax and owner pay | $12,347 |
Swipe to see more →
That's 24.7% — a genuinely healthy result. But it isn't $50,000, and the difference between owners who survive and owners who don't is usually whether they know which of those two numbers they're looking at.
Look at the advertising line especially. Push it from $12,000 to $18,000 chasing a bigger top line and revenue rises while profit falls to roughly $6,300. Revenue up, business worse. That's the trap, and it's very easy to walk into when the only number you watch is the big one.
Which profit number should I actually watch?
There are three, and they answer different questions.
Gross profit = net sales − COGS. Answers: is the product itself viable?
Contribution margin = gross profit − variable costs (fees, shipping, ads). Answers: does one more sale make me money?
Net profit = everything after fixed costs too. Answers: is the business viable?
If you track only one, track contribution margin. It's the number that tells you whether scaling helps or hurts, and it's the one most owners never calculate.
Why doesn't Shopify just show me this?
Because Shopify doesn't hold most of the inputs.
It knows what customers paid and what its own fees were. It doesn't know what you paid your supplier, what you spent on Meta yesterday, what your 3PL charged last week, or what your app stack costs. Some of it can be entered — product costs, for instance — but most stores never do, and even then the ad and shipping data lives somewhere else entirely.
So the dashboard shows the number it has. That's not a criticism of Shopify; it just isn't the number you need to make decisions with.
How to actually work it out
Three realistic options:
A spreadsheet. Free, works fine, and most stores start here. It breaks down when you get busy — and it's always the month you most need the number that you don't have time to update it.
Your accountant's reports. Accurate, and arriving six to ten weeks after the period ended. Essential for compliance, too slow for decisions.
A profit tracking app. Connects sales, product costs, ad spend and shipping in one place, continuously.
That last one is what Rev Room does — it pulls Shopify orders, Meta/Google/TikTok ad spend and real per-order shipping costs from Starshipit or GoSweetSpot, then shows profit after all of it, with GST and tax set-asides for NZ and Australian stores.
But the tool matters far less than the habit. An owner with a spreadsheet they actually update beats one with software they ignore.
The short answer
- Revenue is what customers paid; profit is what's left, and the gap is usually 70–90%
- The most under-counted costs are landed COGS, real shipping, and ad spend
- Contribution margin tells you whether growth helps or hurts
- Shopify can't show you this because it doesn't hold most of the inputs
Related reading: Which of your products are actually making money? · Why your Shopify payout never matches your sales
General information only, current as at 20 August 2026. Figures are illustrative. Talk to your accountant about your own numbers.