- nouz
- Glossary
76 terms
Every term on your P&L, in plain language.
Scoped to this product on purpose. These are the words a Shopify merchant meets on their own statement, which is why each one can say exactly where the number appears and what it is calculated from.
01 / 11
The statement, line by line
Every line between the ticket price and net revenue.
All 34 lines, in the order nouz works them out. Point at a line to see its rule and every term that lives on it; open it to read the term.
The statement
The right arrow on a line, or Enter on a line without a term of its own, moves to the line's card. Escape in the card comes back to the line.
1 Gross Merchandise Value (GMV) Every line item at its original price, before any reduction. Incl. VAT, excl. shipping. 2 Price Reductions What you gave away by pricing below the compare-at price. 3 Price Reductions % of GMV Price reductions as a share of GMV. 3 terms4 Discount Codes Discount codes and automatic discounts allocated to line items. 5 Discount Codes % of GMV Discount codes as a share of GMV. 3 terms6 Shipping Revenue Shipping charged to the customer, net of shipping discounts. 7 Gross Revenue GMV less price reductions and discount codes, plus shipping revenue. 8 Gross Orders Orders placed, on the order date. Cancelled and test orders never count. 9 Gross AOV Gross Revenue divided by gross orders. 10 Returns Refunded products and shipping, recognised on the day the refund happened. 2 terms11 Return Value % of Gross Revenue Returns as a share of Gross Revenue. Return rate +112 Taxes The VAT inside what you kept: tax lines less refunded tax. VAT on a P&L13 Tax % The effective VAT rate on Gross Revenue after returns. VAT on a P&L14 Net Revenue Gross Revenue less returns less VAT. The first number that is really yours. 15 Net Orders Gross orders less the orders that were fully refunded. 16 Net AOV Net Revenue divided by net orders. Average order value17 COGS Unit cost times units sold, less the cost credited back on refunds. 3 terms19 CM1 Net Revenue less COGS. What the merchandise itself earns. 2 terms20 CM1 % CM1 as a share of Net Revenue. Gross margin21 Logistic Costs Shipping rate card (by weight or by parcel size), pick and pack, packaging, return processing and packaging EPR. Logistics cost per order +423 Transaction Costs Payment provider fees per transaction. Chargeback fees belong here too, but the fee of a lost dispute is not on the statement yet. Transaction fees +224 Transaction Costs % Transaction costs as a share of Net Revenue. Blended fee rate25 CM2 CM1 less logistics and payment fees. What fulfilling the order leaves. 2 terms29 CM3 CM2 less marketing. The number that has to pay for the business. 2 terms31 Overhead Costs Recurring costs prorated per day, one-off costs on their booking date. 4 terms33 EBITDA CM3 less overhead. Profit, after everything.
02 / 11
Margin and profit
The ladder from revenue down to what you actually keep.
7 terms
Contribution margin What is left after the costs that move with each sale.
Net revenue − variable costs Lines 19, 25, 29CM1 Net revenue minus the cost of the goods you sold.
Net revenue − COGS Line 19CM2 CM1 minus the cost of fulfilling the order and getting paid.
CM1 − logistics − payment fees Line 25CM3 CM2 minus advertising. The number an operator lives on.
CM2 − marketing costs Line 29EBITDA Profit before interest, tax, depreciation and amortisation.
CM3 − overhead costs Line 33EBIT Earnings before interest and tax: EBITDA after depreciation and amortisation.
EBITDA − depreciation − amortisation Gross margin Revenue minus cost of goods, as a percentage.
(Net revenue − COGS) ÷ net revenue Line 20
Net revenue − variable costs Lines 19, 25, 29CM1 Net revenue minus the cost of the goods you sold.
Net revenue − COGS Line 19CM2 CM1 minus the cost of fulfilling the order and getting paid.
CM1 − logistics − payment fees Line 25CM3 CM2 minus advertising. The number an operator lives on.
CM2 − marketing costs Line 29EBITDA Profit before interest, tax, depreciation and amortisation.
CM3 − overhead costs Line 33EBIT Earnings before interest and tax: EBITDA after depreciation and amortisation.
EBITDA − depreciation − amortisation Gross margin Revenue minus cost of goods, as a percentage.
(Net revenue − COGS) ÷ net revenue Line 20
03 / 11
Revenue and orders
What came in, and what was really yours.
5 terms
GMV Gross merchandise value: every line item at its original price.
Σ original unit price × quantity Line 1Net revenue What you kept after discounts, returns and VAT.
Gross revenue − returns − VAT Line 14Average order value Revenue divided by orders. The number per-order costs live off.
Net revenue ÷ net orders Line 16Discount rate How much of your list price you gave away.
(Price reductions + discount codes) ÷ GMV Lines 3, 5Return rate The share of what you sold that came back.
Refunded value ÷ gross revenue Line 11
Σ original unit price × quantity Line 1Net revenue What you kept after discounts, returns and VAT.
Gross revenue − returns − VAT Line 14Average order value Revenue divided by orders. The number per-order costs live off.
Net revenue ÷ net orders Line 16Discount rate How much of your list price you gave away.
(Price reductions + discount codes) ÷ GMV Lines 3, 5Return rate The share of what you sold that came back.
Refunded value ÷ gross revenue Line 11
04 / 11
Costs
The kinds of cost that decide the bottom line.
8 terms
COGS Cost of goods sold: what the products themselves cost you.
Σ unit cost × units sold − refund credits Line 17Logistics cost per order Everything it costs to get one order to the customer. Line 21Packaging EPR The fee schemes charge per kilogram of packaging you place on a market.
Σ material weight × scheme rate per kg Lines 21, 31Transaction fees What the payment provider keeps from every charge.
% of charged amount + fixed fee per transaction Line 23Chargeback A payment reversed by the customer's bank, plus a fee. Overhead Fixed costs as they appear on the statement.
Monthly × 12 ÷ 365 per day, or yearly ÷ 365 Line 31Fixed costs The costs you pay whether you sell anything or not. Line 31True cost of a return The refund plus everything the refund does not give back.
Σ unit cost × units sold − refund credits Line 17Logistics cost per order Everything it costs to get one order to the customer. Line 21Packaging EPR The fee schemes charge per kilogram of packaging you place on a market.
Σ material weight × scheme rate per kg Lines 21, 31Transaction fees What the payment provider keeps from every charge.
% of charged amount + fixed fee per transaction Line 23Chargeback A payment reversed by the customer's bank, plus a fee. Overhead Fixed costs as they appear on the statement.
Monthly × 12 ÷ 365 per day, or yearly ÷ 365 Line 31Fixed costs The costs you pay whether you sell anything or not. Line 31True cost of a return The refund plus everything the refund does not give back.
05 / 11
Marketing
Measuring acquisition without inventing attribution.
7 terms
MER Marketing efficiency ratio: net revenue divided by total ad spend.
Net revenue ÷ total ad spend POAS Profit on ad spend: contribution margin per euro advertised.
Contribution margin ÷ ad spend ROAS Return on ad spend, as the platform counts it.
Attributed revenue ÷ ad spend CAC What it costs to win one new customer.
Total marketing spend ÷ new customers Repeat rate The share of orders that came from customers you already had.
Repeat orders ÷ total orders Customer lifetime value What a customer is worth over all their orders, not just the first.
Σ contribution of a cohort's orders ÷ customers in the cohort, by months since the first order Cohort analysis Following groups of customers from the month they first bought.
Net revenue ÷ total ad spend POAS Profit on ad spend: contribution margin per euro advertised.
Contribution margin ÷ ad spend ROAS Return on ad spend, as the platform counts it.
Attributed revenue ÷ ad spend CAC What it costs to win one new customer.
Total marketing spend ÷ new customers Repeat rate The share of orders that came from customers you already had.
Repeat orders ÷ total orders Customer lifetime value What a customer is worth over all their orders, not just the first.
Σ contribution of a cohort's orders ÷ customers in the cohort, by months since the first order Cohort analysis Following groups of customers from the month they first bought.
06 / 11
Inventory
The money asleep on your shelf.
4 terms
Inventory value at cost What the stock on your shelf cost you, not what you hope to sell it for.
Σ units on hand × effective unit cost Stock coverage How many days the stock you hold will last.
Units on hand ÷ units sold per day Inventory turnover How many times you sell through your average stock in a year.
COGS ÷ average inventory at cost GMROI The gross margin each euro held in stock earns in a year.
CM1 ÷ average inventory at cost, over the same year
Σ units on hand × effective unit cost Stock coverage How many days the stock you hold will last.
Units on hand ÷ units sold per day Inventory turnover How many times you sell through your average stock in a year.
COGS ÷ average inventory at cost GMROI The gross margin each euro held in stock earns in a year.
CM1 ÷ average inventory at cost, over the same year
07 / 11
How a P&L behaves
The rules that decide whether a report can be trusted, and how it is read.
5 terms
Daily P&L A profit and loss statement rebuilt for every single trading day.
Net revenue − COGS − logistics − payment fees − marketing costs − overhead costs, each for the same day Break-even point The moment the month has covered its fixed costs.
Cumulative CM3 = fixed costs for the period Effective dating A cost that applies from a date forward and leaves history alone. Recognition date The day an amount belongs to. KPI strip A row of headline numbers, each read against something.
Net revenue − COGS − logistics − payment fees − marketing costs − overhead costs, each for the same day Break-even point The moment the month has covered its fixed costs.
Cumulative CM3 = fixed costs for the period Effective dating A cost that applies from a date forward and leaves history alone. Recognition date The day an amount belongs to. KPI strip A row of headline numbers, each read against something.
08 / 11
Ratios and unit economics
The figures a decision is actually held against.
11 terms
Unit economics Whether one order makes money, before anything is scaled. Variable costs The costs that only exist because a sale happened. Lines 17, 27Cost per order What an order costs to serve, and what it costs to win. Lines 21, 23Contribution per order What one average order leaves after its own costs.
CM2 ÷ orders, or CM3 ÷ orders when advertising is included Blended fee rate What payments really cost, across every gateway.
Total payment fees ÷ total gross charged volume Lines 23, 24Landed cost What a unit really costs to have in your warehouse.
(goods + currency + freight + insurance + duty + handling) ÷ saleable units Line 17Margin of safety How much of the month could vanish before it stops paying.
(orders − break-even orders) ÷ orders Break-even ROAS The ROAS a platform must report before the ads stop losing money.
Purchase value ÷ CM2, purchase value as the ad platform counts it Break-even CAC The most you can spend on ads to win an order before it loses money.
CM2 ÷ orders Payback period How long a customer takes to repay what winning them cost.
CAC ÷ contribution per order, converted to months at the observed repeat rate Discount depth How far below list a promotion actually goes.
Discount ÷ list price Lines 3, 5
CM2 ÷ orders, or CM3 ÷ orders when advertising is included Blended fee rate What payments really cost, across every gateway.
Total payment fees ÷ total gross charged volume Lines 23, 24Landed cost What a unit really costs to have in your warehouse.
(goods + currency + freight + insurance + duty + handling) ÷ saleable units Line 17Margin of safety How much of the month could vanish before it stops paying.
(orders − break-even orders) ÷ orders Break-even ROAS The ROAS a platform must report before the ads stop losing money.
Purchase value ÷ CM2, purchase value as the ad platform counts it Break-even CAC The most you can spend on ads to win an order before it loses money.
CM2 ÷ orders Payback period How long a customer takes to repay what winning them cost.
CAC ÷ contribution per order, converted to months at the observed repeat rate Discount depth How far below list a promotion actually goes.
Discount ÷ list price Lines 3, 5
09 / 11
Inventory operations
Buying, holding and running out.
7 terms
Reorder point The stock level that should trigger a purchase order.
(velocity × lead time) + safety stock Lead time Order placed to stock saleable, as observed. Safety stock The cushion held against demand and suppliers going wrong. Sell-through rate How much of the stock available has actually sold.
Units sold ÷ units available, available being the stock at the start plus units received Dead stock Inventory that has stopped selling and keeps costing. Stockout Demand arriving at an empty shelf. Backorder Selling what you do not yet have.
(velocity × lead time) + safety stock Lead time Order placed to stock saleable, as observed. Safety stock The cushion held against demand and suppliers going wrong. Sell-through rate How much of the stock available has actually sold.
Units sold ÷ units available, available being the stock at the start plus units received Dead stock Inventory that has stopped selling and keeps costing. Stockout Demand arriving at an empty shelf. Backorder Selling what you do not yet have.
10 / 11
Planning ahead
What the months ahead will sell, earn and need in the bank.
5 terms
Sales forecast What a store expects to sell in the weeks and months ahead.
Same weekday a year earlier × growth, growth being the recent weeks ÷ the same weeks a year earlier Profit forecast What the months ahead will earn, after every cost.
Net revenue − COGS − logistics − payment fees − marketing costs − overhead costs, for each month ahead Demand planning Turning expected sales into what to order, and when. Inventory forecasting When each product runs out, and what to reorder.
Units to order = daily pace × (lead time + days of cover) − (stock on hand + stock on its way) on the order day Cash conversion cycle How long a euro spent on stock takes to come back as cash.
Days inventory outstanding + days sales outstanding − days payables outstanding
Same weekday a year earlier × growth, growth being the recent weeks ÷ the same weeks a year earlier Profit forecast What the months ahead will earn, after every cost.
Net revenue − COGS − logistics − payment fees − marketing costs − overhead costs, for each month ahead Demand planning Turning expected sales into what to order, and when. Inventory forecasting When each product runs out, and what to reorder.
Units to order = daily pace × (lead time + days of cover) − (stock on hand + stock on its way) on the order day Cash conversion cycle How long a euro spent on stock takes to come back as cash.
Days inventory outstanding + days sales outstanding − days payables outstanding
11 / 11
Mechanics the engine is opinionated about
The cases where a rule had to be chosen, and why.
8 terms
Split shipment One order that leaves in more than one parcel. Line 21Partial refund Money back on part of an order. Line 10Restocking Putting units back on sale, after a return or from a new delivery. Line 21Proration Spreading a fixed cost across the days it covers.
Monthly cost × 12 ÷ 365 per day Line 31Backdating Giving a cost an effective date in the past, on purpose. Catch-all zone The shipping zone that owns every country no other zone claims. Weight brackets How a carrier prices a parcel by the band its weight, or its size, falls in. Tax-inclusive and tax-exclusive prices Whether a shop's prices already contain the tax, or add it at checkout.
Monthly cost × 12 ÷ 365 per day Line 31Backdating Giving a cost an effective date in the past, on purpose. Catch-all zone The shipping zone that owns every country no other zone claims. Weight brackets How a carrier prices a parcel by the band its weight, or its size, falls in. Tax-inclusive and tax-exclusive prices Whether a shop's prices already contain the tax, or add it at checkout.
Every one of these lines, for your own store.
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