> ## Content Index > Fetch the complete content index at: https://conversion.club/llms.txt > Use this file to discover other available public pages before exploring further. # What Does an E-commerce P&L Look Like? - URL: https://conversion.club/playbook/what-does-an-e-commerce-p-l-look-like/ - Published: 2026-10-01T20:55:13.000Z - Updated: 2026-10-19T20:26:05.000Z - Description: A five-step waterfall, from net revenue down to the profit left after fixed costs. Each step answers a different question, and the one in the middle, variable costs, often has nobody watching it. - Author: Jeremie Werner - Tags: Protect margin, #playbook, Analytics A five-step waterfall: net revenue, gross margin, [margin after variable costs](https://conversion.club/playbook/how-do-i-connect-my-site-to-my-p-l/), [contribution margin once marketing is paid](https://conversion.club/playbook/how-do-you-calculate-the-contribution-margin-of-an-order/), and finally channel profit after fixed costs. Each step answers a different question. In most teams, nobody is watching the one in the middle. --- ## The benchmark | Line | What it includes | | -------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Net revenue | Sales excluding tax, minus discounts and returns, plus [shipping fees charged](https://conversion.club/playbook/should-you-offer-split-or-charge-for-shipping/) | | Gross margin | Minus cost of goods | | Variable-cost margin | Minus payment, fulfillment, shipping, packaging | | Contribution margin | [Minus advertising and commissions](https://conversion.club/playbook/how-much-does-my-acquisition-cost-drop-if-my-conversion-rate-rises-10/) | | Channel profit | Minus team, platform, apps, service providers | If you start from Shopify's "net sales," add the shipping fees charged. Shopify leaves them out of that figure, yet the shipping they pay for shows up two lines further down, so your variable-cost margin would come out understated. --- ## The step nobody watches This spring, in a monthly check-in with a fashion brand the authors work with, which makes most of its sales outside France, the CEO described the P&L he has tracked for years: net revenue, minus manufacturing, minus ad spend. So he was tracking three steps out of five. Payment fees and shipping weren't in it, because no team had ever been responsible for them. That very line had just moved. A few weeks earlier, the brand had handed its international sales to a specialist provider, and Shopify now treats those orders as third-party payments, on which it charges its own transaction fees. [The cost of payment](https://conversion.club/tomy-ferreira-payplug-at-best-payment-is-a-badly-framed-topic/) on those sales went from about 1.2% to nearly 2.9%. Every €100,000 sold abroad now costs €1,700 more than before, and that extra cost showed up in none of the three figures being tracked. It only surfaced when the team filled in the margin per visit in the [Prism](https://conversion.club/the-prism-a-framework-that-takes-cro-beyond-the-funnel/), which includes these fees and whose matching box had been left empty. In our view, of the five steps, variable costs is the only one that depends on decisions made elsewhere: finance negotiates the payment provider, logistics picks the carrier, [the product team installs an app](https://conversion.club/playbook/how-much-do-your-shopify-apps-cost-each-year/). So it can deteriorate without anyone having decided to let it. --- ## The rule Read the waterfall from top to bottom every month, and put a name next to every line. Merchandising answers for gross margin, and acquisition for contribution margin. Variable-cost margin goes to one person who has the right to block a new provider until its cost per order is calculated. --- ## The steps 1. The waterfall. Build it with finance over the last twelve months, using the same definitions as the accounting. 2. The percentages. Express each line as a share of net revenue, so you can compare months with different volumes. 3. The slipping line. Find the one that has lost the most points over a year. 4. The links. [Every site project connects](https://conversion.club/playbook/how-much-should-you-spend-on-site-optimization-at-5m-10m-and-20m-in-sales/) to the line it is meant to improve, and every new tool to the line it will weigh on. 5. The sentence for leadership: > "Over twelve months, our variable-cost margin has lost X points, or €Y for every €100,000 in sales, and I propose we give it an owner before launching the next project." --- ## The trap Discounts cause the most frequent disagreement. In accounting, they are deducted from revenue, in a dedicated account, number 709 of the French general chart of accounts. In management dashboards, [promo codes](https://conversion.club/have-sales-become-a-prerequisite-for-selling-online/) often end up filed under marketing spend, since the acquisition team is the one handing them out. Depending on the choice you make, your gross margin and your marketing budget look very different, and any comparison with another e-commerce merchant loses its meaning. Set the rule once with finance and write it at the top of the file. [Returns then add a time lag](https://conversion.club/fashion-e-commerce-return-rate-how-to-cut-it-without-killing-your-sales/). Shopify records them on the date they are processed, so an excellent November can be corrected in December. To judge a month, wait until its returns are in, or read the waterfall as a rolling three-month total. #### Sources - [Finance reports: definitions of gross sales, net sales, returns and shipping fees (Shopify Help Center)](https://help.shopify.com/en/manual/reports-and-analytics/shopify-reports/report-types/default-reports/finances-report?ref=conversion.club) - [Shopify pricing, third-party transaction fees by plan (Shopify France)](https://www.shopify.com/fr/pricing?ref=conversion.club) - [Account 709: rebates, discounts and refunds granted (Dougs)](https://www.dougs.fr/ressources/pcg/classe-7/compte-709/?ref=conversion.club)