How does Flipwise calculate ROI and net profit margin?
Flipwise calculates Return on Investment (ROI) by dividing your net income by cost of goods sold (COGS) and multiplying by 100 to get a percentage:
Net income / COGS * 100
The formula Flipwise uses to calculate the net profit margin for an individual product or order is net income divided by gross income multiplied by 100 to get a percentage:
Net income / Gross income * 100
Definitions:
- Cost of goods sold (COGS) is defined as the amount you paid to purchase an item to resell. You may also see this called "purchase price" in Flipwise.
- Gross income is defined as your total revenue generated from a sale before any costs, fees, or other expenses are deducted. Included in gross income is the total amount your buyer paid to purchase the item including the amount they paid for shipping. Note that we do not include sales tax paid by the buyer in total gross income. All revenue from non-canceled orders is included, even for orders that were partially or fully refunded. Revenue from canceled orders that were fully refunded is excluded. This formula matches the formula eBay uses for its annual tax reporting.
- Net income is defined as your gross income minus all relevant costs associated with a sale. The costs tracked and deducted by Flipwise to calculate net income include marketplace platform fees, your shipping costs, and COGS. You may incur additional fees, like promotional fees or return shipping label costs, which are also considered selling costs and used to accurately calculate net income. Note: for multi-quantity listings and purchase locations, the net return value includes your cost of unsold units, while the total payout value represents the total income generated from all units sold excluding the cost of sold and unsold units.
- Total payout: is defined as your net income plus cost of goods sold for an order. This represents the total cash credited to you from a sale. So if your net income from a sale was $75, and the cost of goods sold for that sale was $10, your total payout would be $85.
- Selling costs: this figure totals up all of your selling expenses like cost to ship and all marketplace fees. It does not include your COGS. Additionally, any adjustments that occur after the sale, like shipping cost adjustments, are not included in the selling costs total, but they do impact the item's net return.
- Total costs: this figure includes your selling costs, any ledger expenses associated with the product, return shipping label costs, and your COGS.