We always think and talk about advanced this and advanced that, but to get the most of the advanced stuff, you have to have solid foundation to built it on.
One of the least popular topics in e-commerce is the numbers game. Not the fake screenshots and 1 week guru numbers game, their is on point. The numbers game as do you even know your REAL numbers?
100% of you just said, wtf is he talking about, I know my numbers, Karlo is drunk again!
Aha! Im not. Let me prove it.
You are a Shopify seller. You sell t-shirts.
T-shirt price: 20.00$
Cost of the t-shirt: 5.00$
You spent 5.00$ on Facebook ads and you sold 1 t-shirt. What is your profit here?
Most of you would say 10.00$ and laugh histerically at my stupid question. Well, most of you would be very very wrong.
Lets see what costs have you missed:
Shopify cost + shopify fee
Apps cost – some apps are just worth it 😉
Taxes – country specific
Outside payment processor
Shipping &handling cost
Other stuff – staff, outsourcing,…
Hmm, these could have a huge impact on your bottom line. This is what matters, not the fake screenshots, its the bottom LINE. This is your bread and alcohol.
If we just take into consideration the Shopify fee + taxes and you can clearly calculate that there is much less profit than you initially thought. How about if you add some other costs in there?
I know it sounds stupid to calculate TIME in the beginning, but when you start doing that, then you really have a business, a stable business. Your time is literally money and you have to get that or you wont make it to the next level.
Im sure I missed a few costs, since they vary from country to country, from niche to niche, from platform to platform – but one is for sure. You really gotta know your DAMN numbers to make it.
It is really troublesome how many people that make good money from e-comm still have no idea about the ultimate numbers game. And when they get hit by a downhill month, well, its pretty much game over and the only reason is – THEY DID NOT KNOW THEIR NUMBERS.
Absolutely amazing article – thank you so much. I gotta know my numbers…even if it scares the shit out of me.
This is so true! You are so right, once you start adding up your time, you are making a loss! Though long term this could turn around from one day to the next and you land a winner, then it was all worth it!!!
Yep you are a very smart pirate, and this is something everyone needs to know, and calculate. Its very deceiving to just add 100% on to the product cost and think you are laughing all the way to the bank. Once you break it all down its bloody scary what is actually left (if anything after costs). Also don’t forget to include bank fees, which also can add up with paying suppliers etc.