How does Flipwise calculate ROI and net profit margin?
Flipwise calculates Return on Investment (ROI) by dividing your net return by cost of goods sold (COGS) and multiplying by 100 to get a percentage:
Net return / COGS * 100
The formula Flipwise uses to calculate the net profit margin for an individual product or order is net return divided by gross sales multiplied by 100 to get a percentage:
Net return / Gross sales * 100
Note: Flipwise matches the same formula eBay uses for its annual tax reporting. This means that gross sales do not include sales tax paid by the buyer. Additionally, all revenue from non-canceled orders is included, even for orders that were partially or fully refunded. Finally, revenue from canceled orders that were fully refunded is excluded.
Note: For Purchase locations as well as items with multiple quantities, Flipwise provides two sets of metrics:
- Net return / ROI: These standard metrics include your return considering both sold and unsold units, giving you a complete picture of the product's performance including any remaining inventory costs. Note that certain product-level costs (like ledger expenses and product fees) are proportionally allocated across all units in the lot.
- Realized net return / Realized ROI: These metrics only include costs directly attributable to units that have been sold, excluding any allocated costs from unsold inventory. This shows the actual profit generated from completed sales only.
Use the standard metrics to evaluate overall product performance including inventory on hand, and use the realized metrics to see profit from completed sales only.