Shopify is a platform for businesses of all sizes to create an online store. It offers users a customizable platform, an easy-to-use checkout process, and a wide range of features. One of the most important features for businesses is the ability to track margins. This article will explain how Shopify calculates margins.
What is margin?
Margin is the difference between the selling price of a product and the cost of goods sold. In other words, it’s the amount of money that a business makes on each sale after accounting for the cost of the product.
For example, if a product costs $10 to make and is sold for $20, the margin would be $10.
Why is margin important?
Tracking margins is important for businesses because it allows them to see how much profit they’re making on each sale. It also allows businesses to compare margins across products and make decisions about which products are more profitable.
How does Shopify calculate margin?
Shopify calculates margin using the following formula:
(Selling Price – Cost of Goods Sold) / Selling Price
For example, let’s say you sell a product for $100 that costs you $50 to make. Using the formula above, we can calculate the margin as follows:
(100 – 50) / 100 = 0.5
In this example, the margin would be 50%.
Conclusion: How Does Shopify Calculate Margin?
Shopify uses a simple formula to calculate margins – (Selling Price – Cost of Goods Sold) / Selling Price. This allows businesses to see how much profit they’re making on each sale and compare margins across products.
