Ecommerce profit glossary

The metrics that decide whether your store makes money

Plain-English definitions, the formula, and one worked example each — the numbers Dashbal calculates for you automatically.

What is net profit?

Net profit is what's left after every cost is subtracted from revenue — COGS, refunds, platform and payment fees, VAT, ad spend and overheads. It's the only number that actually lands in the bank, and it's almost always lower than the revenue your store dashboard celebrates.

Formula: Net profit = Revenue − COGS − refunds − fees − VAT − ad spend − overheads. Example: $84,000 revenue − $53,000 of all-in costs = $31,000 net profit.

Net profit vs gross profit

Gross profit is revenue minus the cost of goods sold (COGS) only. It ignores ad spend, fees, refunds and overheads — so it overstates what you keep. Net profit subtracts all of those. Two stores with identical gross profit can have wildly different net profit depending on ad efficiency and fees.

Formula: Gross profit = Revenue − COGS. Example: $84,000 − $34,000 COGS = $50,000 gross profit (but net profit is far lower once ads, fees and refunds come out).

What is contribution margin?

Contribution margin is revenue minus all variable costs for a product or order — COGS, shipping, payment fees, and often the ad cost to acquire the sale. It's what each sale "contributes" toward your fixed costs and profit, and it's the number that tells you whether scaling a product actually helps.

Formula: Contribution margin = Revenue − variable costs. As a % = (Revenue − variable costs) / Revenue. Example: a $50 order with $30 of variable costs has a $20 contribution margin (40%).

What is break-even ROAS?

Break-even ROAS is the return on ad spend at which an order makes exactly zero profit. Below it you lose money on the ad; above it you make money. A quick estimate is 1 ÷ contribution-margin %.

Formula: Break-even ROAS ≈ 1 / contribution margin %. Example: with a 40% contribution margin, break-even ROAS = 1 / 0.40 = 2.5. An ad set running below 2.5x ROAS is losing money — kill or fix it.

What is true CAC?

True CAC is customer acquisition cost that includes refunds, payment processing and platform fees — not just raw ad spend ÷ new customers. It's usually higher than the CAC an ad platform reports, which is why a "profitable" campaign on Meta can still lose money in the bank.

Formula: True CAC = (ad spend + platform/processing fees + refund drag) / new customers. Example: Meta shows a $22 CAC; after fees and refunds the true CAC is often 10–15% higher.

Blended ROAS & MER

Blended ROAS is total revenue ÷ total ad spend across every channel — not a single platform's self-reported ROAS (which double-counts and flatters). MER (Marketing Efficiency Ratio) is the same idea: total revenue ÷ total marketing spend. Both cut through per-platform attribution inflation.

Formula: Blended ROAS = total revenue / total ad spend. Example: $100,000 revenue / $31,000 total ad spend = a blended ROAS of 3.2x.

COGS & AOV

COGS (cost of goods sold) is the direct cost of the products you sold — unit cost plus, often, inbound shipping. It's usually the single biggest line in the profit gap. AOV (average order value) is total revenue ÷ number of orders — useful for sizing shipping thresholds and offers.