Building a P&L That Tells the Truth

12 min · text · Advanced

Every operator quotes a margin. Ninety percent of them are lying — either to themselves or to me. Today you build a P&L that survives an accountant, not just one that feels good on a spreadsheet.

Building on Module 1: You learned contribution margin basics in Module 1. This lesson applies the same framework to your live analytics dashboard — interpreting real numbers, not worked examples.

The full cost stack — what to subtract from every dollar

Revenue is the easy part. Here is what comes out before you touch a cent:

COGS (Cost of Goods Sold) — the unit cost from your supplier, landed to your warehouse or your customer's address. If you ship direct from AliExpress, this includes the first-mile courier cost (ePacket, standard, etc.). Do not use the AliExpress "product price" — use the actual cost you pay including shipping to you.

Inbound shipping — if you are holding inventory in a 3PL, the cost to move stock from supplier to your warehouse. Dropshippers: already in COGS.

Outbound shipping — the customer's shipping. Even if you advertise "free shipping," you are paying it. Use your actual blended outbound cost per unit, averaged across geographies.

Payment processing fees — Stripe or Shopify Payments. In Australia: 1.75% + $0.30. Stripe US: 2.9% + 30c USD. Vary by region in your model.

Platform fees — Shopify monthly plan amortised per unit. At $79/mo Standard plan and 500 orders/mo, that is $0.16 per order. Adjust for your order volume.

Apps and software — amortised across units. If you spend 50/mo on apps and do 500 orders, that is $0.30 per unit.

Returns and refunds — the cost to accept a return and re-ship or eat the loss. Estimate 2-6% of revenue depending on category, store reputation, and shipping window. Deduct from revenue or add to COGS — the outcome is the same.

Chargebacks and disputes — unpaid orders. Typically 0.3-1.0% in a healthy account, 2-5% in a new account with bad shipping. Budget it.

Ad spend — the cost to acquire that customer via paid channels. Critical: this is blended. If you run retargeting + cold audience, a single customer might be touched by three campaigns. Attribute the full ad spend of the customer's journey, not just the conversion campaign.

Subscription / recurring revenue allocation — if you run email campaigns with Klaviyo, amortise that cost across the cohort. If you run organic (no allocation).

Returns logistics — if you accept returns, the cost to process, verify, and dispose/restock. This is buried in returns % but worth naming.

Sales tax / VAT — once you cross your jurisdiction's threshold, you must collect and remit. Set aside the applicable percentage of net revenue for periodic payments.

A real P&L on a $34.95 product

Line	Per order
Retail price (inc. GST)	$34.95
Less: GST payable (10%)	-$3.18
Net revenue	$31.77
COGS (AliExpress + ePacket to customer)	-$5.40
Outbound shipping (included in COGS above, amortised)	-$0
Stripe/Shopify fees (~2% + $0.30)	-$0.94
Shopify platform ($79/mo ÷ 400 orders)	-$0.20
Apps and software ( 50/mo ÷ 400 orders)	-$0.38
Returns and refunds reserve (3%)	-$0.95
Chargebacks and disputes (0.5%)	-$0.16
Ad spend to acquire (CPA 1)	- 1.00
Contribution margin	2.74
Margin %	40.1%

That 2.74 goes toward:

Payroll / VA labor (typically