Literature that Will Teach How to Calculate the Profit of an Online Store
Once you have your online store ready, the real work starts. To make an online store profitable, there are a few key steps to take:
How to Calculate the Profit of Your Online Store
Running a profitable online store takes careful planning and execution across many areas. Here are the key steps you need to focus on:
1. Understand Your Target Audience
Research your target demographics - their interests, pain points, and values. Create buyer personas to represent your ideal customers. Tailor your products, messaging, and marketing to align with what matters most to them.
2. Build Relationships Through Content
Create a content strategy to attract and engage potential customers. Offer valuable educational content that speaks to their interests and questions. Be helpful, not salesy. Building trust leads to sales.
3. Promote on Social Media
Leverage platforms like Facebook, Instagram, and Pinterest to raise awareness of your brand and products. Encourage engagement through contests, user-generated content, and special offers just for followers.
4. Use Email Marketing
Collect email addresses to build an audience you can market to directly. Send targeted campaigns about new arrivals, promotions, or helpful content. Personalize messages with customer names and product recommendations.
5. Optimize for Organic Search
Make your website easy for search engines to crawl and index. Incorporate relevant keywords naturally throughout your site's content. Create blog posts and long-form guides around questions your customers are asking.
How to Calculate Online Store Profit
Once you have consistent traffic and sales, you need to track your key metrics to see real profitability. Avoid common accounting mistakes with help from these highly-rated books:
1. Accounting for eCommerce by Lucas Robak
Breaks down concepts like cost analysis, financial statements, and benchmarking into understandable lessons for online sellers.
2. Web Analytics 2.0 by Avinash Kaushik
A deep dive into interpreting site metrics and user behavior data to inform better business decisions.
3. The Art of Pricing by Rafi Mohammed
Outlines data-driven approaches to finding profit-maximizing price points for your products.
4. Online Business Analytics by Evan Baehr
How to leverage data for decisions around pricing, marketing, customer service, product development, and more.
About the Author
Helen Birk has run a successful online store since 2014. She loves helping other entrepreneurs start and grow their own ecommerce businesses by sharing what she's learned along the way.
FAQs
What are some key things I should do before trying to calculate profit?
Before calculating profit, you need to identify and understand your target audience, implement strategies to drive consistent traffic to your online store through content, email marketing, social media, and SEO optimization. Having an audience of engaged potential buyers is step one.
What expenses go into calculating the profit of my online store?
Main expenses include cost of goods sold, platform and payment processing fees, advertising and marketing costs, web hosting and domain registration fees, and contractor expenses. Calculate these on a monthly basis.
What tools can I use to measure online store profit?
Try ecommerce platforms like Shopify and Wix that provide reporting on sales, traffic, and promotions. Install Google Analytics to track ROI from marketing campaigns. Use PayPal reports to reconcile transaction expenses and fees.
What common mistakes can skew online store profit calculations?
Not accounting for all expenses, not calculating cost of goods accurately, focusing solely on revenue rather than net profit, and lacking organization of financial records. Stick to standard accounting practices.
Should I be calculating profit daily, weekly, or monthly?
Aim to reconcile expenses and calculate net profit on a monthly basis. Daily or weekly is difficult to measure accurately. Month-over-month profit tracking provides the data you need to spot trends.
Will an accountant calculate my online store profit for me?
Yes, hiring an accountant or bookkeeper can remove the burden of profit calculation. Make sure to clearly share expenses, merchant account statements, and sales reports for an accurate picture.
What profit margin should I aim for?
Experts recommend aiming for a 20-30% profit margin for ecommerce businesses. This number can vary widely depending on factors like industry, business model, and scale.
