True profit vs. revenue
Revenue is what customers paid. True profit is what is left of that money after every cost that order caused, in a fixed order. The gap between the two is where a shop can look healthy and still earn nothing.
The order of the deductions
Klirry takes costs off an order in one fixed order, so the same order always gives the same answer:
- VAT, at the destination country's rate, taken out of the VAT-inclusive price
- the payment fee for the method the customer used
- shipping cost for the destination country
- product cost
- packaging
- other variable cost
- allocated ad spend
- allocated fixed costs
The part before ad spend is the order's contribution: what the order leaves to pay for ads and fixed costs. The full rules are on the methodology page.
An example
This is an illustrative example, not a real customer's numbers. A customer in Germany pays EUR 119.00 for one order.
| Step | Amount in EUR |
|---|---|
| Revenue (VAT included) | 119.00 |
| VAT | -19.00 |
| Payment fee (assumed 2.9%) | -3.45 |
| Shipping (assumed) | -5.00 |
| Product cost (assumed) | -30.00 |
| Contribution | 61.55 |
| Ad spend for this order | -40.00 |
| Fixed costs share (assumed) | -6.00 |
| True profit of this order | 15.55 |
A view that only subtracts the product cost and the ad spend from the revenue shows EUR 49.00 for the same order. The difference, EUR 33.45, is VAT, the payment fee, shipping and fixed costs. None of it is hidden, it is just not on that screen.
What to do with it
Work out your own contribution per order first: it decides how much you can pay for a sale. The break-even ROAS calculator does the VAT, fee, shipping and product cost steps with the same formula Klirry uses, and it runs in your browser. If you want it on every order automatically, see pricing.