See POAS vs revenue-only reporting
Profit Bid connects store costs to ad spend so you bid on margin — not vanity ROAS.
From revenue to net profit
- COGS45%
- Variable costs15%
- Fixed & overhead28%
- Net profit12%
Net margin is the thin final slice. Ads should optimize contribution margin, then watch it flow to net.
Track POAS automatically from your store — upload profit conversions and scale winners with A/C/X labels.
The layers of margin
Gross margin subtracts COGS. Contribution margin also subtracts variable order costs. Net margin subtracts everything else too: rent, salaries, software, taxes.
Each layer answers a different question. Net margin tells you if the business is profitable overall; it is too coarse to bid individual keywords on.
How to use net margin
Track net margin at the business level to ensure advertising growth actually reaches the bottom line — not just contribution.
For ad bidding, use contribution margin per order so decisions stay granular; then confirm at month-end that improving POAS lifted net margin too.
Frequently asked questions
Common questions about this topic — tap to read answers.
Why not bid on net profit directly?
Fixed costs do not vary per order, so allocating them to individual conversions is arbitrary. Bid on contribution margin, monitor net margin.
What is a good ecommerce net margin?
It varies widely; many DTC brands run 5–15% net margin. The goal is a positive, stable trend as you scale ads.
