If you ask five different Egyptian e-commerce founders how they calculate net profit, you will likely get five different answers. Most of them miss critical variables like return shipping fees or payment gateways costs.
If you want to know if your brand is genuinely surviving, here is the exact step-by-step mathematical formula you need to use.
Step 1: Start with Collected Revenue, Not Shopify Gross Sales
Your starting point is not Shopify's gross sales. It is Collected Revenue. $$\text{Collected Revenue} = \text{Gross Shopify Sales} - \text{Cancelled/Unshipped Orders} - \text{Returned Orders (RTO Value)}$$ If you shipped 100 orders worth EGP 80,000, and 25 orders were returned by Bosta, your Collected Revenue is EGP 60,000 (from the 75 delivered orders).
Step 2: Deduct Delivered COGS (Cost of Goods Sold)
Only deduct the product cost for the orders that were delivered. $$\text{Delivered COGS} = 75 \text{ orders} \times \text{unit product cost}$$ The returned 25 products go back into your warehouse inventory (assuming they are not damaged) and are not considered sold.
Step 3: Calculate Your Real Shipping Costs
This is where most founders make mistakes. You pay for both delivered orders and returned attempts. $$\text{Total Shipping Cost} = (75 \text{ delivered orders} \times \text{outbound shipping fee}) + (25 \text{ RTO orders} \times \text{return shipping penalty})$$ If Bosta charges EGP 55 for delivery and EGP 35 for returns, your shipping cost is EGP 4,125 + EGP 875 = EGP 5,000.
Step 4: Subtract Total Marketing Spend
Deduct every single pound spent on Meta Ads, TikTok Ads, Google Ads, and influencer campaigns during that timeframe. If you spent EGP 20,000 on Facebook ads, subtract that entire amount.
Step 5: Subtract Payment and Operational Overhead
Finally, subtract:
- Payment processor fees (e.g., Paymob or Valu rates on prepaid orders, courier transfer commissions on cash).
- Warehouse packing materials, rent, and staff salaries.
The Final Formula
$$\text{Real Net Profit} = \text{Collected Revenue} - \text{Delivered COGS} - \text{Total Shipping Cost} - \text{Marketing Spend} - \text{Overheads}$$
Automating the Math with Analify AI
You shouldn't have to spend your weekends building spreadsheets to run this formula. Analify AI connects Shopify, your ad platforms, and Bosta to compute this equation dynamically every single second.
Stop guessing your numbers. Connect your store for free to see your real net profits automatically.