P & L calculations
All costs and revenues are calculated to determine Cash/Accrual Profit and Cash/Accrual Profit Margin:
- Cash Profit calculation is based on the Payment amount of an order: (Payment – Refunds) – (Item Cost + Total Fees) + Adjustments
- Accrual Profit calculation is based on the Grand Total amount of an order: Sum(Grand Total) – (Item Cost + Total Fees) + Adjustments
Note: Sum(Grand Total) = Order Grand Total – Return Grand Total.
- Cash Profit Margin calculation: ((Payments – Refunds) – (Order Cost Total + Adjustments)) / (Payments – Refunds) * 100.
- Accrual Profit Margin calculation: (Sum(Grand Total) – (Order Cost Total + Adjustments)) / Sum(Grand Total) * 100.
Note: Sum(Grand Total) = Order Grand Total – Return Grand Total.
Introducing the P&L tab
Below are various costs and revenues used to calculate profit and loss, as shown on an order’s P&L tab:
- Item Cost – Cost of purchasing the item from the vendor. Sellercloud saves item cost with the order details to show it at the time of the order; clicking item cost opens an editing window for updating.
- Item Cost is based on A) The item cost on the Order Date, and B) The method used to calculate cost, which is determined by the Client Setting Order Profit & Loss Calculated Using (Average Cost, Site Cost, or Last Cost). Item cost is calculated either as a fixed cost (Site Cost or PO Last Cost) or with an average (Simple or Weighted). Watch how SellerCloud calculates item cost.
- You can configure item cost to include shipping or third-party costs incurred for you to receive the item. Vendor discounts can also be factored into item cost. Learn more about including shipping costs.
- If the Client Setting used is Average Cost, but Average Cost is zero, then Site Cost is used on the order’s P&L tab. Note that the chosen Client Setting is used in Sellercloud’s P&L reports.
- Posting Fee – eBay listing fee (earlier Sellercloud versions applied this to the first order for the item) or a Reverb bump fee.
- Commission – Dollar amount the channel receives from the proceeds of the sale. This may be referred to as the Final Value Fee.
- Transaction Fee – Costs associated with processing payment, such as a PayPal fee. The Client Setting Credit Card Transaction Fee lets you set a percentage that is calculated from the sales and included in transaction costs.
- Shipping Cost – Amount you paid to ship the item to the customer, regardless of whether the customer paid for shipping.
- Tax – Amount the buyer paid for tax on the order.
- Rebates – Vendor rebates that are credited to the seller when the item is sold. This value reduces the cost of the order. You can configure rebates at the product level by clicking Rebates on a product’s detail page.
- Dropship Fees – Vendor dropship fee. Only appears in dropship orders.
- Co-Op Fees – Allowance fee from select channels.
- Order Cost – Sum total of all costs associated with the order.
- Payments – Total amount the customer paid, including shipping.
- Adjustments – Adjustments are made to an order in 2 ways:
- By automatic import – The Adjustments field will appear in orders by default, and is editable. You can click the amount to revise it, and you can manually add more adjustments if desired. Show me that P&L Adjustments window. No setting is required to enable these actions.
- By manual entry – If an adjustment is not auto-imported into an order, the Adjustments field will only appear if you select Enable adjustments in P&L in the Client Settings. Once enabled, the Adjustments field will then appear with a zero balance: Click the $0.00 (show me) to add adjustment(s) manually to the order. Show me that P&L Adjustments window.
If you want the flexibility of both options, select the Enable adjustments in P&L setting.A third option exists to bulk-upload adjustments to orders, and you can download a sample Excel spreadsheet with the required columns. Show me where. Bulk-uploading adjustments behaves like the automatic import.
- Profit – Order profit totaled as a dollar amount.
Introducing the Order Profit Detail
Clicking the P&L tab’s Show Profit & Loss icon opens the Order Profit Detail:
The first 2 columns are an item’s properties and the next 6 are 3 pairs of two columns.
Note: Columns with Unit refer to a value of one unit of the SKU, and columns with Site refer to the value of all units of that SKU in the order.
- Unit Cost / Site Cost – Cost of the item in the order (values are the cost of the item at the time of purchase)
- Product Unit Cost / Product Site Cost – Current cost of the item
- Selling Unit Price / Selling Site Price – Selling price of the item
- The far right of the grid shows the order’s profit as dollars and percentage.
- When an item is sold in an international marketplace, the Profit and Loss shows all costs and payments in the same currency used for the purchase and in the currency configured in the default company; in this case, U.S. dollars. Sellercloud checks currency conversion rate daily and saves the rate at the time of the order with the order details page.
- If an order was refunded, an additional column appears with the refunded amount.
- If an item was returned via RMA, item cost is removed from the P&L tab. Likewise, when an FBA order is returned to FBA, item cost is removed from the order.
- Because a replacement order sends a new item to the customer, Sellercloud calculates its P&L loss separately from the original order. If no payment is made on the replacement order, the P&L tab only shows the order costs.
- Sellercloud’s Reports module offers numerous P&L reports, including the Product Profit report showing profits for every order generated by sales of this product. Check out the introductory Reports Overview video.
Updating profit and loss through updated item cost
When adjusting or updating the cost on an item, use the following procedures to update P&L for related orders. This can be done in a single order or in bulk.
Updating a single order
- From the order’s Action menu > ReCalculate Order Cost > Go.
- After seeing the message “Order Cost re-calculated successfully,” click the P&L tab’s Re-generate P&L icon and await the message “P&L re-generated successfully.”
Updating orders in bulk
- From the Manage Orders page, search for orders with a specific SKU or SKUs.
- Enable the Select all pages option > Action menu > Re-Calculate Order Cost > Go. This creates a queued job.
- When completed, on that same Manage Orders page > Action menu > Generate P&L > Go. This creates a queued job to update the orders.