Gross Profit

Gross profit, sometimes referred to as sales profit or gross income measures a company’s financial health. It is determined after deducting the fees and expenses connected with producing and selling products or services. A company’s gross profit will be found on the company’s income statement and can be calculated with the following formulaic equation:

(Revenue-Cost of Goods Sold) / Revenue

For sellers on Amazon and eBay, calculating gross profit allows sellers to understand how successful sales can be and helps to determine where product cost should be reevaluated. For eCommerce sellers, Algopix provides a way to best understand how to get the gross profit numbers they’re aiming for by providing information regarding the following:

Marketplace: The list of markets selected for analysis. Users have the ability to select from a list of 15 markets (7 Amazon markets, 7 eBay markets, and Walmart). For the full list of supported markets, please click here.

Market Price: This is the recommended selling price for the product in that specific market. Algopix takes into consideration all the variables, including the number of sellers, sellers’ feedback and sales history, and uses a proprietary algorithm to calculate the market price.

Purchasing Cost: The price as quoted by a supplier or the price previously paid for existing inventory.

Breakdown of Expenses: Algopix provides a summary of the expenses associated with selling the research product in the selected markets. With this information, online sellers can calculate expected margin taking into account marketplace (eBay/Amazon/Walmart) fees, PayPal fees (for eBay sellers), FBA fees (for Amazon sellers that use Amazon’s storage solution), shipping costs (based on the product’s dimensions) and taxes.

Profit: The profit after all expenses including merchandise cost.

Competition: Based on the number of sellers who offer the product for sale in each market.

Demand: Algopix provides the demand level based on the volume of sales of the product last month in each market selected during the search process.

Recommendation: The recommendation is based on profit and demand calculation – if there is a demand to this product on that specific market and the expected profit margin is greater than or equal to 15%, then the product is ‘Recommended’.

Related Terms