Ecommerce Profit and Loss Template: The Only P&L Statement You’ll Ever Need to Grow
Joy Sharma
Creating a profit and loss statement is one of the most crucial things you’ll need to do for your eCommerce business. So, why is finding a profit and loss statement template so difficult?
If you’ve spent hours scouring the internet for the perfect P&L template that you can use to track your business growth but still come up empty-handed, you’re not alone. Finding an effective way to draft these documents is one of the biggest complaints we hear from our clients, especially those who run an online business.
That’s why our team has taken matters into our own hands by creating an easy-to-use profit and loss statement template that you can use to track your receivables and expenses daily and monthly.
Most importantly, we designed our template with eCommerce businesses in mind.
Using both a daily and monthly tracking feature gives business owners the power to adjust their spending as needed, creating better results for long-term business growth.
In this article, we’ll walk you through the exact steps to get the most out of your P&L statement so you can maintain complete transparency and optimize your business growth in real-time.
And we’ll do it by answering three questions …
- Why Should You Use a Profit & Loss Statement Every Day?
- How to Track Daily Profit & Loss for Your eCommerce Brand?
- What a Monthly eCommerce P&L Statement Template Reveals
We provide our clients with P&L statements, creating a clear channel of information transfer between the brand and the agency. This practice bridges the communication gap, ensuring mutual accountability and fostering a significantly more productive relationship.
This process aligns both parties on shared objectives and transparency. Hence, we diligently maintain two types of P&L statements:
The daily P&L facilitates quick responses to immediate financial dynamics, while the monthly P&L allows for a comprehensive understanding of longer-term trends and overall financial health.
This dual-P&L system ensures both immediate oversight and long-term strategic planning.
Part 1: Why Should You Use a Profit & Loss Statement Every Day?
Most businesses focus only on creating a profit and loss statement for each month.
This statement includes all of the income the business generated during this timeframe. It subtracts the total operating expenses used during the month, leaving you with a clear picture of your overall profit margins for the month.
Instead of relying solely on monthly data, we decided to streamline the process even more by creating a daily P&L statement template that you can use to track your profit margins at the end of every single business day.
While this may sound excessive, there are three reasons why you should start using a daily P&L statement.
Reason #1: It Helps You Hit Your Targets
Here’s a good example of a daily P&L statement in action:
Let’s say you’ve been working with an eCommerce agency to determine the target numbers you want to hit each day for your profits. In this case, we’ll say that you aim to hit a 15% profit margin, which means you need to reach 2.2 MER each day.
Using your daily P&L statement, you can compare the results you get each day against the target numbers you and the agency agreed upon. This helps all parties involved remain accountable for their end of the bargain, increasing your likelihood of reaching these financial goals over a period of time.
Reason #2: It Keeps You Agile & Flexible
By the time you check your monthly profit using a P&L template, the time for making changes to your advertising strategies, which in turn leads to higher profits, has already passed.
But with a daily financial report, you can quickly adjust anything that seems to be holding your eCommerce business back from hitting the targets, whether that be marketing ideas or unnecessary expenses.
This process gives you and the agency you work with a chance to observe how metrics change as they scale, including whether or not these actions lead to higher traffic on certain channels, leading to bigger profits for the brand.
Perhaps even more importantly, this allows you to determine if these measures could decrease the fixed costs of your operating expenses since more revenue equals more freedom to be aggressive with your scaling.
Reason #3: Gives Customer Insights
Tracking daily sales and revenue allows businesses to gain insights into customer behavior and preferences in real-time. Analysis of daily P&L data can reveal patterns in customer purchasing habits, enabling businesses to tailor marketing strategies and product offerings to better meet customer needs and preferences.
Part 2: How to Track Daily Profit & Loss for Your eCommerce Business
Thankfully, creating a daily financial statement isn’t nearly as tedious as it sounds.
At least, not if you use our live P&L template.
We start off using a spreadsheet similar to Excel in Google Sheets – designated columns and fonts for plugging in all of your important metrics each day. The only thing that you have to do is keep it updated daily and analyze your results against your targets.
Fixed Costs
This column is where you’ll list all of the operating expenses that stay the same every month, otherwise known as fixed costs. Even though these costs may vary based on your business plan, some of the most common fixed costs include:
- Rent/Mortgage payments for your office space
- Insurance for your business
- Salaries for all of your full-time employees
- Subscriptions services, including any software you use on a recurring basis
Exclude the depreciation and amortization of current assets, which are typically recorded on the balance sheet.
From there, you’ll plug the monthly cost of each of these items into the column. Based on this information, our template will automatically calculate the daily cost of each expense, saving you the headache of crunching all of these numbers yourself.
Shopify Sales
With your fixed costs in place, you can start tracking your actual profits, specifically for your Shopify storefront. We break these numbers down into detailed categories so you can have a crystal clear picture of your total revenue daily.
Total Orders
First, we look at the total number of orders placed in your shop on each day. This should include any and all products listed in your Shopify account.
Top Selling SKUs
Next, we determine which items in your shop generate the most daily sales. Typically, we’ll use the top ten best-selling products for these columns. This shows you how many of each of these products are being sold, allowing you to keep track of your inventory more effectively.
Amazon Sales
Total Orders
Just like for Shopify, we look at the total number of orders placed from your Amazon storefront each day.
Top Selling SKUs
From there, we determine which items in your shop generate the most sales daily using the same system as the previous columns.
Of course, if you only use Shopify or Amazon, rather than using both, you can always leave that portion of the template as is. Google Sheets will be able to calculate your numbers either way!
Shopify Revenue
One of the best parts about using Shopify is that the platform automatically tracks each of these factors in your account, making it easy for entrepreneurs and small business teams to extract this information daily.
Gross Sales
This number indicates the total number of sales without any deductions. If you ever need to calculate this number on your own, just multiply the total number of units sold by the original pricing of each item in your shop.
Discounts
Here, you’ll determine any discounts your customers used when placing these orders. This includes products that were on sale, discount codes, BOGO (buy one, get one) offers, and so on.
Returns
Next, look at how many items were returned or refunded during the same day. This part is important when determining your total revenue and which products don’t seem to perform well after being purchased.
Net Sales
Once you’ve plugged in your gross sales, discounts, and returns, the template will automatically calculate net sales for you. This shows you how much money your eCommerce business actually made that day with all of the deductions taken into account.
Shipping & Taxes
Many P&L statements opt not to include these two categories, but in our opinion, the more detailed your financial reports are, the better off you’ll be in the long run.
Depending on your business’s structure, shipping can be considered part of your total expenses or a source of revenue for your brand. Tracking these metrics will help you understand how structuring your business plan can impact your profit margins.
Fulfillment
These columns refer to everything that takes place between a customer placing an order in your store and them receiving the product, including the production of the product itself. Understanding your fulfillment-related costs is a crucial step in the profit and loss process, meaning that you should keep this information as accurate as possible.
Cogs (Cost of Goods Sold)
The cost of goods sold, or cogs, equates to the total cost of producing each individual item in your shop. These costs can vary greatly depending on the type of products you offer, the manufacturer your choose to use, the materials selected, and more.
Shipping
Unlike the previous section, shipping in the fulfillment process refers to the actual services you use to complete your orders. This means the cost of shipping through USPS, FedEx, DHL, UPS, and other fulfillment carrier options, as well as the cost of packing materials used in the shipping process.
Payment Processing
Next, you’ll plug in any fees your business incurs while taking customer payments. For example, payment processing services like Stripe and PayPal often charge merchant fees, which take a small percentage of each order processed.
Agency Fees
If you are working with an eCommerce business agency, you should also include any fees you pay them on a daily basis. In most cases, agencies work based on a retainer, which is why our sheet allows you to plug in their retainer rate and automatically calculates the daily cost for you.
Fixed Costs
Even though you’ve already included your fixed or overhead costs in their own column, our P&L template includes a separate place for them in the fulfillment category. Just copy the total expenses found in the previous column and paste that number here.
Influencers & Creative Costs
Suppose you work with influencers and other creatives in the marketing process, like UGC (user-generated content) companies, graphic designers, and copywriters. In that case, this is where you’ll include any fees that you pay for their work each day.
Pick & Pack Fees
For most eCommerce business owners, it’s easier to store your goods in a warehouse than at your own office. Pick and pack fees refer to any costs that come from storing and shipping your goods during the fulfillment process.
Amazon Fees
As we’ve mentioned, not every eCommerce business chooses to work with both Amazon and Shopify. If you don’t use Amazon, you can leave this section blank. Otherwise, you’ll include any Amazon seller fees like referrals, shipping, and other costs for your online store.
Advertising
Facebook Ads
This number includes only the amount that your brand spends on Facebook advertising without any additional metrics like ROAS, CTR, etc.
Google Prospecting
Since placing Google ads can be a more involved process than other advertising channels like social media, we’ve broken it down into four specific categories. The first is Google prospecting, which refers to the amount you spend on attracting potential customers through Google’s Display and Youtube ad products. Typically, this is the least ROI positive of Google costs as these are demand generation ad products.
Google Conversions
Google Conversion campaigns are specialized Google advertising campaigns designed to maximize new sales by targeting the existing search volume, primarily through Google’s search and shopping ad products. These campaigns go beyond mere Google prospecting efforts, as their primary objective is to drive specific actions that result in increased sales.
Google Branded
This type of Google advertising is when you pay to ensure that your brand is the first option that pops up when someone searches for your brand name, making it more costly but also the highest ROI google Ad product.
Google Total
Finally, once all of the information is in place, the template will calculate the total amount you spend on Google-related advertising costs each day.
Social Media Channels
Facebook and Google ads are the two most popular advertising channels for eCommerce businesses, but that doesn’t mean you won’t be spending money on other platforms. Our sheet includes options for TikTok, Twitter, Bing, Quora, and other more specialized channels. However, these columns were designed to be customizable, giving the power to switch them out for any other platforms you’re advertising on.
Optional Metrics
Just as we’ve said, the more detailed your metrics are, the more effectively you can track your progress. That’s why we’ve included two additional columns for specific Facebook-related data.
The first, Facebook CPA, includes the cost it takes for a customer to perform one action based on your Facebook campaign. You can usually find these numbers in the Facebook ads account manager.
The second, Facebook ROAS, is the return you get for each ad campaign. If you need to know how to calculate your target Facebook ads ROAS, check out our previous blog on the topic here:
You can choose to update these numbers each day or omit them from your profit and loss statement based on your preference.
Tracking Your Profits With The P&L Template
Obviously, the goal of using a profit and loss statement template is to be able to accurately track your Profit in real-time, especially when you’re using a daily P&L statement. So in our Google Sheets, we include some core metrics that you and your team will want to assess each day to achieve the results you’re after.
Items Per Order
For inventory purposes, we track how many items were purchased in each order, helping you stay fully stocked on your best sellers.
AOV
AOV, or average order volume, tells how much the average customer purchases when they visit your store.
Percentage of Revenue
This refers to the total percentage of revenue you use on cogs or the cost of goods sold.
Dynamics
Dynamic percentages show you how much of your revenue is impacted by deductions like discounts, returns, and other factors.
This helps you track your Variable Cost % against your average to find trends and also measure against industry benchmarks
Fixed Costs
By now, you might be wondering why we place so much emphasis on tracking your fixed costs every day, given that they don’t change. We recommend doing this to help you see how your current overhead costs are a % of rev and how scaling the rev can decrease this as a percentage and help you secure points of margin.
Expected Targets
Essentially, these numbers showcase the targets that you and your team are trying to hit each day, allowing you to judge the results you actually get accordingly.
Understanding Your Net Profits
Ultimately, this Google doc will help you better understand your profits daily and monthly. You’ll find that we’ve broken down your profit margins into specific categories, including:
- Gross Profit
- Net Profit/Net Income
- ROAS per social media campaign
- Profit Per Order
- CPA per social media platform
These are just a few of the KPIs you can track with our profit and loss statement template for eCommerce businesses.
Part 3: What a Monthly eCommerce P&L Statement Template Reveals
If tracking your gross margins daily can help you effectively adjust your business strategies, why bother tracking your monthly profits as well?
In our opinion, monthly income statements offer a more holistic view of your business and allow you to identify more opportunities for growth. Plus, if you’re already using our daily P&L template, tracking your monthly targets becomes significantly easier.
Here’s how it works:
The Formula For Monthly P&L Statements
Unlike other financial reports like a cash flow statement or a balance sheet, the purpose of a profit and loss statement is to create a broader view of the overall business rather than just focusing on the money coming in and focus more on profitability rather than cash in the bank.. To do this, we use a few specific formulas.
Gross Profit = Total Revenue – Cogs
You can use this formula to determine your gross profit or the money you made before deducting other expenses.
Operating Profit = Gross Profit – Operating Expenses
Next, you’ll take your answer from the previous formula to find your operating profit. This shows you how much money you actually made after deducting expenses, including variable expenses like office supplies, workflow integrations, and anything else that doesn’t fall under your fixed costs.
Total Net Income = Operating Profit – Non-Operating Expenses + Non-Operating Income
Finally, to find your total net income before taxes, you’ll take your operating profit and subtract any other non-operating expenses or non-operating income. You’re left with the net profit you earned without any tax obligations.
Using the Monthly P&L sheet
Now that you have these monthly formulas at your disposal, you can start identifying growth opportunities within your profit and loss statement. There are a couple ways you can achieve this, but we recommend starting by looking at three main categories that can be used as leverage for potential growth.
1. Gross Sales / Operating Revenue
Formula – Net Sales + Discounts + Rev
The primary component of your P&L statement underscores your gross sales, which is the operating revenue and the first figure featured on the statement. Operating revenue signifies the income generated from a business’s main operations, such as selling specific goods or offering particular services. However, this top-line revenue, including discounts and returns, may not precisely depict revenue growth, as it can create a potentially magnified view of growth. Therefore, it is vital to consider these factors when assessing your financial performance.
Different revenue definitions –
Order Revenue = Total Sales + Returns
This particular definition of revenue is often favoured by marketing departments as it offers a more comprehensive insight into the direct results of their efforts. Since returns are generally not directly tied to marketing activities, they are typically not separated in this calculation, making it a more suitable metric for marketing departments.
Total Sales = Order revenue – returns
This usually is the most Clear view of revenue as this is revenue after discount and returns.
Net Sale = Total Sales – Shipping – taxes
This is the most important revenue line for an ecommerce profit and loss template as this is the revenue number that should be congruent with your shopify net sales number.
2. Variable Cost
Within the context of a Profit & Loss (P&L) report, variable costs represent the expenses that fluctuate in tandem with the company’s output or production level. In contrast to fixed costs that stay unchanged irrespective of production volume, variable costs can either rise or fall based on the company’s operations. Typical examples of variable costs encompass costs related to raw materials, direct labor, and shipping or packaging. A company’s profitability is directly influenced by these costs, as they increase with escalated production or sales and decrease when production is curtailed.
Cost of Goods :
COGS signifies the direct expenses related to the production or provision of a business’s goods or services. It encapsulates costs such as raw materials and production, for instance, the total cost to receive your product made and receive it from your supplier is usually what entails COGs for an ecom business.
Regardless of the product variety you deal in, it’s likely you’re procuring resources from a supplier. Therefore, exploring alternative, more cost-effective suppliers or substituting to more affordable materials could be an effective strategy to reduce your cost of goods sold (COGS).
Forward shipping
This basically how much it cost you to ship the product from your warehouse to the customer’s doorstep.
Merchant fees + Payment Processing Fee
This is the weighted average of the fees collected by the payment processors you use like paypal, stripe etc and also if any merchant fees.
Fulfillment Expenses
These are the fees taken by your fulfillment partners/ 3PLs for services like pick and pack, etc.
3. Gross Profit
Gross Profit = Revenue – Variable Cost
Gross profits refer to the amount of money you earned before any deductions besides the COGs. It serves as a useful gauge to determine if your product pricing strategy aligns with your profit objectives. You can find opportunities for growth in your gross profits by examining factors like:
- Industry gross profit averages for your eCommerce niche
- ROAS and budget allocation effectiveness for your campaigns
It’s a good idea to research the average gross profit for your niche industry, but in most cases, having more than 70% is a good rule of thumb. But if you find that your online store is below the industry average, use it as an opportunity to adjust your ad spend and find new ways to produce ad creatives without increasing your budget.
You can find more insight on how to do that here.
4. Ad spend
This is the sum of all marketing dollars that were spent on platforms like facebook, tik tok, google ads with the expectation of making an ecommerce revenue outcome.
5. Fixed Cost
These Costs refer to the expenses incurred by the business that are irrespective of the volume of product sold. This usually includes everything apart from Variable cost which for a typical Ecommerce business is –
- Payroll
- Tech expenses
- Agency retainers
- Rent
6. Profit
The concluding figure on a profit and loss statement, commonly known as net income, denotes the profit or loss incurred over a specific reporting period . This figure is often referred to as the ‘bottom line’.
This figure donated as a % of rev is known as “Profit Margin”
A health ratio for ecommerce business to have is to have a 4:1 for revenue : profit
Profit like gross revenue has multiple definitions, so this is a checklist for you if you wanna learn more about those.
- Gross Profit = Revenue – Cost of Goods Sold
- Operating Profit = Gross Profit – Operating Expenses
- Pre-tax Total Income = Operating Profit – Non-operating Expenses + Non-operating Income
- Ultimately, Net Income is typically computed as Net Income = Pre-tax Total Income – Tax Liabilities.
Each of these calculations delivers specific insights about your business’s profitability before various other types of expenses are considered.
Put Your Profit & Loss Statement To Use
Clearly, using a profit and loss statement template isn’t just great bookkeeping or financial planning strategy. Instead, it gives you the power to rapidly scale your eCommerce business and grow your profits by monitoring your metrics every day and every month. If you need more help putting our P&L template to good use, connect with our team of eCommerce startup specialists today.
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2 Responses
hey, great article appreciate you!! where can i get the excel template
I’m glad you liked it!
You can find the template at the end of the blog.