Income Statement - Metric Definitions
The income statement (also known as a profit and loss statement) in Lifetimely is a powerful tool for tracking your store’s financial performance. It provides insights into your revenue, costs, and profitability, helping you make data-driven decisions to optimise your ecommerce business. This guide will walk you through the key metrics of the income statement.
Key Terms and Definitions
To help you interpret the income statement, here are some key terms:
- Gross Revenue: Total income generated from sales before any deductions.
- Cost of Goods Sold (COGS): Direct costs of producing or purchasing the products you sell.
- Gross Profit: Revenue minus COGS. Indicates how much money you’re making before expenses.
- Operating Expenses: Costs incurred in running your store, such as ad spend, software subscriptions, and salaries.
- Net Income: The final profit or loss after deducting all expenses from gross profit.
Metric definitions
Jump to a section:
Statement header
- Net sales - Sales after both discounts and refunds have been deducted, including tax
- Marketing costs - Total ad spend across all marketing accounts integrated with Lifetimely and/or manually entered as a marketing cost in the "Custom costs" tab
- COGS - Cost of goods sold. Product costs + shipping costs + transaction fees + fulfillment expenses.
- Net profit - Sales after discounts, minus all costs (refunds, taxes, COGS, marketing costs, and operating expenses)
Income statement
- Sales - Total sales before subtracting discounts and refunds
- Product revenue - Sales from products before subtracting discounts and refunds
- Shipping revenue - Total shipping costs paid for by customers before subtracting discounts and refunds
- Discounts - Total value of coupon code discounts as calculated in Shopify. Sale discounts are not included.
- Refunds - Total value of refunds
- Net sales - Sales (including taxes) after both discounts and refunds have been deducted.
- Taxes - Total taxes assessed on orders
- COGS - Total Cost of goods sold. Product costs + shipping costs + transaction fees + fulfillment expenses.
- Products sold - Total cost of goods sold (based on Shopify's "cost per item" field and/or costs entered in the "Product costs" tab)
- Shipping - Total shipping costs (calculated according to rates set in the "Shipping costs" tab)
- Transaction fees - Total transaction costs (calculated according to rates set in the "Transaction costs" tab in Lifetimely)
- Fulfillment expense - Total handling costs (calculated according to rates set in the "Handling costs" tab)
- Marketing - Total ad spend across all marketing accounts integrated with Lifetimely and/or manually entered as a marketing cost in the "Custom costs" tab
- Contribution margin - Total sales minus discounts, refunds, taxes, COGS, and marketing spend
- Operating expenses - Total custom costs (based on costs manually entered in the "Custom costs" tab that aren't designated as marketing costs)
- Net profit - Total sales minus discounts, refunds, taxes, COGS, marketing spend, and operating expenses. (Contribution margin - Operating expenses)
⚠️ Note: The Net Sales metric in Lifetimely is calculated differently from the Net Sales in Shopify. In Shopify, Net Sales = Gross Sales - Discounts - Refunds and it doesn't take into account the Shipping Revenue. Whereas in Lifetimely, Net Sales = Product Revenue + Shipping Charged - Discounts - Refunds - Taxes
KPIs (Key Performance Indicators)
- % Gross margin - Gross margin (net sales - taxes - COGS) divided by net sales
- % Net margin - Net profit divided by net sales
- % Refunds - Total value of refunds divided by net sales
- % COGS - Total value of COGS divided by net sales
- % Marketing - Total value of marketing spend divided by net sales
Acquisition
- Blended CAC - Total marketing spend divided by the number of new customers
- Blended ROAS - Net sales divided by total marketing spend
- New customer ROAS - New customer net sales divided by total marketing spend
- New customers - Number of new customers in the time period
- New customer sales - New customer net sales
- Repeat customers - Number of repeat customers in the time period
- Repeat customer sales - Repeat customer net sales
- % Repeat - Number of repeat orders divided by total orders
- % Repeat sales - Repeat customer net sales divided by net sales
Orders
- Orders - Number of orders in the time period
- AOV - (Average Order Value) Sales (after subtracting discounts but before subtracting refunds) divided by number of orders in the time period. This includes shipping revenue, whereas Shopify's AOV does not.
- New customer AOV - New customer net sales divided by the number of new customer orders in the time period
- Repeat customer AOV - Repeat customer net sales divided by the number of repeat customer orders in the time period
- Average number of items - Average number of total quantity of line items across all orders