How to Calculate Gross Margin (Ecommerce Examples)
Key takeaways Gross margin = (net sales − COGS) ÷ net sales × 100. Gross profit is the same figure in dollars. For ecommerce,
Plain-English breakdowns of margin, cash flow, inventory, and Amazon economics, written for the operators running the business.
Contribution margin, COGS, pricing, promos
13-week forecasting, CCC, burn & runway
Reorder points, forecasting, landed cost
Budget vs actual, models, scenarios
Margin, CAC, retention & ops benchmarks
Ratios, KPI packs, public-company teardowns
FBA fees, ACoS/TACoS, reconciliation
Ecom accounting, COGS, cash vs accrual
Starting, funding, valuation, finance terms
Key takeaways Gross margin = (net sales − COGS) ÷ net sales × 100. Gross profit is the same figure in dollars. For ecommerce,
Key takeaways A bill of materials (BOM) is the component-level recipe for a product: every part, the quantity per unit, and its cost. BOM
Key takeaways The cash conversion cycle (CCC) is the number of days your cash is tied up between paying suppliers and collecting from customers.
Key takeaways The 3:1 benchmark comes from SaaS, where lifetime value is years of recurring revenue. DTC revenue is transactional and decays, so the
Profit is a monthly story. Cash is a weekly one. A handful of cash flow KPIs, read every Monday off a rolling forecast, tell
Key takeaways Scenario planning models the same business under three sets of assumptions — Bear (worst), Base (expected), and Bull (best) — to show
Key takeaways Promo ROI = (incremental gross profit − promo cost) ÷ promo cost, where 100% is break-even and anything below it means the
Key takeaways Pricing for profit means Selling Price = Total Cost ÷ (1 − target margin), where total cost is fully loaded and the
Key takeaways Break-even ACoS is the advertising cost of sale at which your Amazon ads make zero profit — spend more and each ad
Key takeaways An ecommerce financial model turns driver assumptions (orders, AOV, costs, inventory days) into three linked statements: a P&L, cash flow, and balance
Inventory replenishment is how you keep stock topped up without tying cash in shelves you don’t need — the recurring call on when to
A good gross margin for ecommerce lands in the 60–70% range for most stores, but that number hides a lot. Beauty runs far higher,
