You can determine your true profits by deducting your expenses from your income. This is one of those rules that we all end up taking for granted after learning it in school. When we finally decide to launch a company, we actually end up forgetting about it.
And sometimes, we wait until it is too late to begin investigating why our company is struggling. You ponder how your profit margins could be so low when your sales were good.
You ponder why, despite receiving 50 orders each day, your business continued to deteriorate day by day until the firm’s books were in the red.
Almost usually, the cause may be found amid the folds of those unaccounted expenses that you somehow overlooked or that you failed to take into consideration.
In reality, many companies fail because their owners don’t provide a thorough examination of the link between expenditures and income. It tells the tale of Jonathan, who traveled overseas to purchase clothing to resell online.
He had enough reason to think he had a reasonable margin of profit since the selling price was more than the buying price. However, Jonathan neglected something due to his zeal and inexperience.
He had miscalculated the cost of shipping, forgotten about customs fees, and misjudged the price of labeling each item of clothing. His company, which likewise had every chance of being successful, was only able to stay together for roughly three months.
The most popular item in its e-commerce, a t-shirt that consumers could select to design, was the reason for the entire failure of its business: although it had strong sales, the cost of customization, which was also initially overestimated, totally eliminated the profit margin.
The tale of Jonathan is the tale of every business owner for whom we developed the YITH Cost of Goods for WooCommerce plugin.
a simple but effective management tool that enables you to continuously track your e-commerce trend and examine the connection between product prices and your net revenue.
Through our panel, you can include things like shipping costs, taxes, VAT charges, payment gateways, and a 360-degree view of your total costs. This will help you determine which of your products have a higher profit margin (which aren’t always the ones that sell the most! ), what kind of profit you’ll make from promotions or discounts, and which sale prices will cover all costs, especially those that frequently go unnoticed and that actually can make a difference.
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