Calculate Real Profit per Sale
Know exactly how much you keep after every cost.
What this recipe is for
Making sure each sale actually contributes to profit—not just revenue—by stripping out all variable costs and seeing the true margin.
What you’ll get
- Clarity on actual profit per transaction
- Visibility into hidden cost drains
- A baseline to price, bundle, and scale with confidence
- Early detection of declining profitability before it becomes a trend
Key inputs
- Selling price
- Cost of goods sold / direct delivery cost
- Fulfillment or service delivery variable costs
- Transaction fees (payment, platform)
- Discounts or promotions applied
- Any incremental customer acquisition load allocated per sale (optional for fuller view)
Core logic
Gross revenue hides leaks. Real profit = Price − all direct and variable costs. If you don’t know this number, you can’t tell whether growth is sustainable or just masking losses. Every decision (discounts, upsells, acquisition) must respect the true per-sale profit floor.
Step-by-step actions
Step 1: List all costs tied to a single sale
Include product/service cost, fulfillment, transaction fees, and any incremental acquisition allocation (e.g., portion of CAC if directly tied).
Step 2: Compute profit per sale
Real Profit = Price − Total Direct & Variable Costs
Also express as margin: Profit Margin % = Real Profit / Price.
Step 3: Benchmark against targets
Set a minimum acceptable per-sale profit or margin that covers overhead and contributes to growth. Flag any offer falling below that.
Step 4: Test profitability changes
- Raise price slightly and measure impact on conversion vs. profit lift.
- Reduce a cost component (packaging, fulfillment) and measure net effect.
- Evaluate the effect of a promotion on real profit after discount.
Step 5: Embed into decision filters
Before launching promotions, new channels, or upsells, run the “real profit per sale” calculation to ensure the move doesn’t erode the base economics.
Decision thresholds / guardrails
- Real profit ≤ 0 → Stop; you’re losing money on each sale. Reprice or cut direct costs.
- Margin falls below your growth-required floor → Adjust price or reduce variable cost before scaling volume.
- Discounting erodes more profit than projected lift → Reassess the promotion’s ROI before broad rollout.
Examples
- Product seller:
Price = $80. COGS $30, fulfillment $5, transaction fees $3, promo discount $8 → Real Profit = $80 − $46 = $34 (42.5% margin).
- Service provider:
Package price $1,200. Direct delivery cost (contractor time, tools) $400, payment fees $20 → Real Profit = $780 (65% margin), used to decide if a lower-tier offering still makes sense.
Thinking checks
- Does every offer clear the minimum profit threshold before you push volume?
- Are promotions tested for their real profit impact, not just top-line lift?
- Are cost changes tracked so you can spot margin erosion early?
If the answer is no…
- You’re running growth that isn’t profitable—pause scaling until real profit is fixed.
- Hidden costs are eating margin—break down and validate each component.
- Price too low for the delivered value—test small increases with value framing.
What to track (minimum)
- Real profit per sale
- Profit margin percentage
- Changes in direct/variable costs over time
- Impact of price or cost experiments on per-sale profit
Launch Ana AI✦