I don't know if I'm profitable
Sales are up, but there’s less money in the bank than there should be, and you can’t say why. Your P&L shows one total, so you can’t tell which channels or products are actually making you money. Without that, every decision about where to grow is a guess.
Does this sound familiar?
You’re selling more than last year and keeping less of it. Channel mix, rising COGS, or overhead could be the cause, and you don’t know which.
Amazon has the volume, but after referral fees, FBA, and ads, Shopify or wholesale might be keeping more per order.
A product can top your sales report and still lose money once ad spend and returns come out.
You know what you spend on ads every month. You don’t know how much profit comes back from it.
When margins get tight, you trim wherever is easiest instead of where the money is actually leaking.
Why this happens
A standard Profit & Loss Statement lumps everything together, with one revenue line and one advertising line for the whole business. It tells you whether you made money overall. It can’t tell you where that money came from or where it went.
In ecommerce, costs land unevenly. Amazon takes referral and FBA fees, Shopify orders carry payment processing and shipping you pay yourself, and wholesale sells at a lower price with almost no ad spend. In a combined Profit & Loss Statement, those differences disappear. Getting them back means assigning fees, ad spend, and COGS to the channel and product that caused them.
That work depends on accurate books and accurate COGS. If your settlements aren’t reconciled or your landed costs are missing, any profitability analysis inherits the same errors. That’s why we look at the books first. When founders see their numbers broken out by channel for the first time, most are surprised by which part of the business is carrying the rest.
How we fix it
CFO Advisory
We start by reviewing your current financials to find the blind spots and the questions you need answered. Then we build a channel P&L from your actual numbers, so you can see what each channel keeps after fees, ad spend, and COGS. You can bring us in hourly at $250 for a one-time analysis, or keep a monthly retainer with a live KPI dashboard so you can watch your margins as they move.
Have a big financial decision coming up?
- 1 hour · $250
Hourly CFO Advisory
We go through your financial trends with you and explain which metrics matter most for your business. Then we build income projections and a few scenarios around the decision you’re facing, so you can see what each option does before you commit.
Schedule your CFO consultation (opens in a new tab)
Where to go next
DownloadCost Cutting Quick Wins ChecklistSpending benchmarks and a quick-wins checklist to cut waste in software, ads, packaging, fulfillment, and payroll without stalling growth.
ToolEcommerce Marketing Budget CalculatorA free Excel calculator that shows how ROAS, ad spend, agency fees, and discounts flow through to your daily contribution margin and net income.
Article8 Ecommerce Cost Cutting Strategies: Boost Profits Without Slowing GrowthTariffs, fulfillment costs, and weaker ad performance are squeezing 7- and 8-figure sellers. This covers eight data-driven strategies to cut costs, not growth.
VideoEcommerce Profitability Explained: From Gross Sales to Net IncomeGross sales, net sales, COGS, cost of sales, fixed expenses, other income. Stephen Brown walks each layer of the P&L and what each subtraction leaves you: gross margin, contribution margin, net operating income, and finally net income. He closes on the thing that catches product businesses out, which is that profit is not cash. Buy inventory and cash drops even in a profitable month.
Does selling on Amazon versus Shopify affect your product margins differently?
A product's underlying cost doesn't change based on where it's sold, but Amazon's Buy Box competition often pushes selling prices, and therefore margin, lower than the same product could earn on Shopify. Amazon-specific inbound fees like the Inbound Placement fee also add directly to COGS in ways a Shopify sale wouldn't, so tracking contribution margin by channel is the best way to see the real difference for your own products.
Read: Comparing margins across sales channelsHow do you measure whether ad spend is actually profitable?
Start by tracking your ad spend as a percentage of revenue over time, since ad efficiency can change from month to month. Then look at what’s left after COGS, fulfillment, merchant and platform fees, and advertising costs. If ad spend is eating up your contribution margin, it may not be profitable.
Read: Use contribution margin to test ad spendWhat financial benchmarks should ecommerce businesses track to gauge performance?
Start with gross margin and the major costs tied to making each sale, including COGS, fulfillment, merchant and platform fees, and advertising. Then look at fixed costs like payroll and marketing, along with the cost of debt. Together, these numbers give you a much clearer picture of your overall profitability.
Read: Understand the profit margins that matter