Why does Shopify calculate a gross profit dollar value of zero when the COGS on the item is zero, but there is a sell price attached to the item?
Hey @idem_david when the Cost of Goods Sold (COGS) is set to zero in Shopify, the platform calculates the ross profit dollar value using this formula:
Gross Profit=Selling Price−COGS
If the COGS is zero, the formula becomes:
Gross Profit=Selling Price−0=Selling Price
However, in this case, Shopify shows a gross profit dollar value of zero when no COGS is entered since it takes the absence of COGS as incomplete data entry. In other words, Shopify presumes that it cannot accurately calculate gross profit if it does not have both the Selling Price and COGS values.
This will ensure that the users input correct data for COGS, thus Shopify will give the right profitability insights. In case COGS is indeed zero (for example, digital products with no cost), you should fill in the COGS field with 0 instead of leaving it blank or null. It will then show Shopify that this value is intended, and Shopify will calculate and display the gross profit correctly.