Understanding your store’s profitability starts with knowing the difference between gross margin, net margin, and order margin. These three metrics may sound similar, but they measure different aspects of your WooCommerce business performance. In this guide, we’ll explain each concept clearly and show how the ProfitBlue financial reporting plugin helps you analyze them in real time.
What Is Gross Profit?
Gross profit is the simplest measure of profitability — it shows how much money you make after subtracting the cost of goods sold (COGS) from your total revenue.
Formula:
Gross Profit = Revenue – COGS
For example, if your store earned $10,000 in revenue and your COGS were $6,000, your gross profit is $4,000. Gross profit tells you how efficiently you’re producing or sourcing your products. But on its own, it doesn’t tell the whole story — especially if you sell products at varying price points.
What Is Gross Margin?
Gross margin takes gross profit a step further by showing it as a percentage of your revenue. This percentage makes it easy to compare performance across different products, months, or stores.
Formula:
Gross Margin = (Gross Profit ÷ Revenue) × 100
From the previous case — if your gross profit is $4,000 on $10,000 in revenue, your gross margin is 40%.
Gross margin is crucial for spotting trends: a rising gross margin means your products are becoming more profitable, while a declining margin signals higher costs or increased discounts. ProfitBlue automatically calculates this metric for every product and period, letting you identify which products or categories drive your best returns.
Understanding Net Margin
While gross margin focuses on product-level profitability, net margin considers all business costs — including fixed costs, variable costs, shipping, ads, and taxes.
Formula:
Net Margin = (Net Profit ÷ Revenue) × 100
It tells you the percentage of your total revenue that remains as pure profit after every expense.
If your revenue is $10,000 and your total expenses (COGS + shipping + ads + taxes) are $8,000, your net profit is $2,000, which equals a 20% net margin. Tracking this figure in ProfitBlue helps you understand how much money truly stays in your business — not just what’s earned before expenses.
What About Order Margin?
Order margin is a unique metric that ProfitBlue introduces for WooCommerce users. It shows how much you earn per order, factoring in all costs related to that specific order — including product costs, shipping, and fees.
Unlike gross or net margin, which look at aggregated data, order margin focuses on profitability per transaction, helping you identify unprofitable orders that might otherwise go unnoticed.
A product may have a 60% gross margin, but after factoring in shipping and payment fees, the order margin could drop to 45%. This makes it clear where small inefficiencies affect your bottom line.
Why These Margins Matter
Understanding the difference among gross, net, and order margins helps you evaluate true profitability beyond surface-level revenue, identify which products or categories are most profitable, optimize pricing, shipping fees, and discounts, and spot trends to make smarter business decisions.
ProfitBlue simplifies all this by calculating and displaying each margin automatically in your WooCommerce dashboard — giving you real-time visibility into what drives or drains profit.
Final Thoughts
Gross, net, and order margins each reveal a different layer of your WooCommerce financial story. Gross margin tells you about product efficiency, net margin shows overall profitability, and order margin exposes real profit per transaction.
By combining these insights with ProfitBlue’s automated reports, you can make confident, data-driven decisions to grow your eCommerce business sustainably.