What is net profit?
Net profit is what is left of revenue after every cost. That means cost of goods, operating expenses, payment fees, refunds, chargebacks and tax. Net margin is net profit divided by revenue.
Take a store with $100,000 in revenue, $40,000 COGS and $30,000 operating expenses. Operating profit is $30,000 before payment costs. Net profit is about $23,000 after them.
Gross profit, operating profit and net profit
| Mesure |
What it subtracts |
Example on $100k revenue |
| Gross profit |
COGS only |
$60,000 (60%) |
| Operating profit |
COGS + operating expenses |
$30,000 (30%) |
| Résultat net |
Everything, including payment costs and tax |
$23,100 (23.1%) |
Most P&L templates bury payment processing inside COGS or opex. Refunds and chargebacks go nowhere at all. The calculator pulls them out because they behave differently. They scale with order count, not revenue. And two of the three are recoverable.
Payment leakage: the line most P&Ls hide
Processing
$3,300
2.9% + $0.30 on 1,333 orders
Remboursements
$3,000
3% of revenue
rétrofacturation
$600
0.5% of orders × ($75 + $15 fee)
Total leakage
$6,900
6.9% of revenue
In this example, payment leakage is almost a quarter of operating profit. Processing is the cost of doing business. Refunds are partly a product and policy problem. Chargebacks are different.
A dispute nobody answers is lost by default. Merchants who do answer report winning about half of the cases they fight, and Chargeflow's data shows compelling evidence lifts the win rate on "item not received" cases by 1.5x.
Mastercard expects chargebacks to reach about 324 million a year by 2028, up 24%, and merchants flag 45% of them as fraud. The line is growing, which is why it deserves its own row in the P&L.
Net profit, net income, taxable income and cash
Four terms get mixed up in ecommerce P&Ls. They are not the same number.
| Term |
Ce que cela signifie |
Where it differs |
| Résultat net |
Revenue minus every cost, before or after tax |
The calculator's main output |
| Net income |
The same figure as net profit after tax |
Accountants and investors use this word |
| Taxable income |
Net profit adjusted by tax rules |
Depreciation schedules, owner pay, carried losses |
| Cash flow |
Money in minus money out in the period |
Inventory bought but unsold, chargeback debits, reserves |
Net income and net profit are the same thing. Taxable income is not, so the tax line in the calculator is an estimate.
Cash is the one that bites. A chargeback is debited from the payout as soon as the dispute lands, weeks before the case is decided, and a processor reserve can hold cash a profitable store has already earned.
What a simple P&L leaves out
The calculator covers the big lines. Before trusting the net margin it reports, check that these costs are inside the inputs.
- Owner pay and contractor hours are in operating expenses, even when nobody invoices them
- Inventory is counted as COGS when sold, not when bought; unsold stock is cash, not cost
- Sales tax collected from customers is excluded from revenue; it is money held for the state
- Marketplace referral fees (Amazon 15%, eBay 13.6%) sit in the processing line for those channels
- Refunds are netted off revenue, and the refund rate in the advanced panel matches last quarter's actual
- Depreciation on equipment and software spread over its useful life, not expensed in one month
What is a good net profit margin?
Grocery and food retail2% to 4% Apparel ecommerce4% to 8% Consumer electronics2% to 5% Beauty and cosmetics8% to 12% Digital products20% to 40% SaaS (growth stage)0% to 15% At a 5% net margin, one lost $100 chargeback erases the profit on $2,000 of sales. That is why the chargeback line matters more than its size suggests.
How to raise net profit without raising revenue
Recover chargebacks you are losing by defaultDisputes with no response are lost automatically. Merchants who answer report winning about half, and complete evidence lifts the rate further.
Cut refund leakage with policy and fast repliesClear size guides, delivery estimates and a 24-hour support reply cut refund rates by 1 to 2 points.
Move processing to interchange plusAbove $20,000 a month this usually saves 0.3 to 0.6% of revenue.
Audit software and subscription opex quarterlyUnused seats and overlapping tools are the fastest opex win.
Raise AOV with bundles and thresholdsFixed per-order costs like fulfillment and the processing fixed fee fall as a share of revenue.
Model tax in the calculatorSet the income tax rate in the advanced panel to see after-tax profit.
Foire aux questions
How do I calculate net profit?
Revenue minus all costs: cost of goods, operating expenses, payment processing, refunds, chargebacks and tax. Divide by revenue for net margin.
What is the difference between gross profit and net profit?
Gross profit subtracts only the cost of goods. Net profit also subtracts operating expenses, payment costs and tax. Gross margin is often 40% to 60% for physical products. Net margin is often 5% to 10%.
What is a good net profit margin for ecommerce?
5% to 10% is typical for physical products. Digital products and SaaS can exceed 20%. Below 3% leaves no buffer for a bad month of refunds or disputes.
Are payment processing fees part of COGS or operating expenses?
Accountants treat them either way. Most ecommerce P&Ls put them in COGS, since they scale with sales. The calculator shows them on their own so you can see their size.
How do chargebacks affect net profit?
Each lost chargeback costs the sale, the processing fee and a $15 to $25 dispute fee. At a 0.5% dispute rate and $75 ticket, that is about $600 a month on 1,333 orders. Staff time comes on top.
Does net profit include tax?
Net profit after tax does. Set the tax rate in the calculator's advanced panel; leave it at 0 for pre-tax net profit.
Is net income the same as net profit?
Yes. Both mean revenue minus all costs, and "net income" is the term on formal income statements. Taxable income is different, because tax rules change how depreciation, owner pay and losses are counted. Cash flow is different again.
What is 30% profit on $100?
A 30% net margin on $100 of revenue is $30 of net profit, leaving $70 for every cost. On the $100,000 example store, the same margin would mean $30,000 of net profit. The calculator's 23.1% result is below that.
How do I calculate 20% profit?
For a profit target, multiply revenue by 0.2: $100,000 × 0.2 = $20,000. To price for a 20% net margin, divide total cost per unit by 0.8. Payment fees, refunds and disputes belong in that cost first.
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