Net Gross Profit 3
Net Gross Profit 3 is an e-commerce company's operational profitability. It is calculated by subtracting returns, the cost of goods sold, fulfillment costs, and marketing costs from Gross Sales.
Net Gross Profit 3 calculates a company's profit from its operations after considering returns, COGS, fulfillment costs, and marketing expenses. It's determined by subtracting these costs from Gross Sales.
This metric offers a comprehensive view of operational profitability, factoring in marketing expenditures, which is crucial for understanding an e-commerce company's health and long-term sustainability.
Related terms
Gross Profit 3
Gross Profit 3 encompasses the profitability measure that includes the product purchasing costs, fulfillment costs, marketing costs associated with promoting the products, and general marketing expenses. It still does not consider overhead costs such as rent, utilities, and salaries. Like Gross Profit 1 and 2, returned items are not deducted in the calculation of Gross Profit
Net Gross Profit 2
Net Gross Profit 2 is Gross Sales subtracted by returns, the cost of goods sold, and the fulfillment costs.
Contribution Margin
The Contribution Margin, a crucial profitability metric, is the leftover from Gross Sales after deducting all the direct costs of fulfilling the orders. Some argue that it is the same as Net Gross Profit 3, taking marketing spending into account. In contrast, others say marketing spending should not be part of calculating the contribution margin.
Turn data into decisions.