5 Things That Drain Your Shopify Profits (And How To Stop ‘Em!)

5 Things That Drain Your Shopify Profits (And How To Stop ‘Em!)

Reading Time: 5 minutes(Last Updated On: December 24, 2020)

It’s not enough to just be profitable. There, we said it. Surprising but true. Your Shopify store could be profitable beyond your wildest dreams, but if you don’t manage your profits correctly, they could get drained in no time. 

Managing and maximizing your Shopify store’s profitability involves a holistic approach – there are many moving parts that come into play and you need to zoom in on these while simultaneously zooming out for the full picture.

Keep reading to find out the 5 things that drain your Shopify profits and how you can avoid them (teaser: cutting expenses isn’t even number 1!).


Shopify Profits Drain #1: Inferior Shopify User Experience 

You could be losing customers and ultimately profits by having an inferior user experience. Imagine you have a site visitor who fits your ideal customer persona. This customer has high intent and begins the customer journey. Sounds perfect. 

But along the way, something in your user experience causes this potential customer to drop off. That’s profits down the drain!


This is where e-commerce analytics really shines, to help you avoid this profit drain. By analyzing data from Google Analytics (particularly Enhanced Ecommerce) as well as other data sources from your Shopify account, you can see at which point in the customer journey you’re losing customers. These are some of the deterrents that could be scaring off your users:

  • Not enough customer reviews
  • Complicated checkout process
  • Payment security concerns
  • Shipping costs & delivery speed
  • Limited payment methods

Shopify Profits Drain #2: Low Profit Margins or Inaccurate Profit Calculation

Setting your product price is both an art and a science, a delicate balance. On the one hand, you don’t want to price yourself out of the market but on the other hand, you need to earn a decent profit margin – both gross and net profit margins. Oftentimes, online sellers don’t calculate their Shopify profits accurately and land up with lower profit margins than anticipated. 


Don’t leave anything to chance when it comes to your Shopify profit margins. What can really save the day is to automate your profit calculation using a Shopify profit calculator, to make sure nothing slips through the cracks.

Tip: BeProfit is the most accurate profit margin calculator Shopify has to offer in its app store. Track your Shopify profits, expenses and orders through the user-friendly dashboard and make simplified data-driven decisions to optimize your store’s profitability.  

Once you have the full picture of your expenses, you can confidently set the right pricing to optimize your profits.

Grow Profits


Shopify Profits Drain #3: Minimize Expenses 

Here it is, the most obvious yet very crucial profitability drain – high expenses. 


Cut costs. Sounds simple but is actually one of the most challenging aspects of running any business. Which expenses should you cut or minimize? What effect will a cost snip in a particular area have on your overall profit margins? 

This is where a profit margin calculator Shopify app comes in handy. It lays out all your Shopify store’s expenses in one dashboard and shows all the data in intuitive, visual graphs. This helps you to pinpoint any problem areas and focus on where you can cut costs to optimize profits. 

Typical troublesome operating costs include:

COGS (cost of goods sold) – try to minimize your COGs. Conduct research to make sure you’re getting the best possible cost price for the products you sell. This will give you a bargaining chip with your suppliers or if they aren’t willing to price negotiate you could always find a new supplier with a better price. 

Important: don’t compromise on reliability in favor of price.


Marketing costs – you want to maximize your ROI (return-on-investment) for your marketing. This entails lowering your Customer Acquisition Cost (CAC), one of the most important e-commerce analytics metrics. An accurate Shopify profit calculator can help you work out which ad platforms perform best so you can focus on those instead of spreading yourself too thin on non-effective marketing channels. 

Shipping costs – shipping costs take up a big chunk of any e-commerce store’s profits. Since you want to be able to offer your customers the fastest shipping at the lowest price (or preferably even free), then it’s worth shopping around to make sure your carrier is offering you the lowest possible shipping costs.

Technical tools – technology is key for optimizing user experience and driving e-commerce success. These technical costs, while obviously not as onerous as having a physical storefront, can add up and slice into your profitability. Try to distinguish between the must-haves and the nice-to-haves to see where you can scale back.  

Cost of returns – a big profit drain is an e-commerce necessity: customer returns. One tactic to minimize returns is to extend the return window – without time pressure, customers tend to hold onto or forget to return goods that they might otherwise have sent back.

Payment processing fees –  offer incentives for customers to use payment methods with lower processing fees.


Shopify Profits Drain #4: Unutilized Products and Services

Businesses often incur expenses for products and services they aren’t even using. These small expenses manage to slip through the cracks as they’re not impactful enough to be remembered and usually automatically renew unless actively canceled.  


Utilize what’s needed and remove what isn’t utilized.

We recommend keeping track of all small expenses, including subscriptions, paid tools, plugins, contracts, and so on, that don’t offer value to your business. 

While small, these expenses are easy to overlook and can add up to significant amounts over time.

If you didn’t know, it costs 5 times more to acquire a new customer than to retain an existing one. That being the case, you should keep in mind that improving your customer retention will lead to an increase in your #ShopifyStore’s… Click To Tweet


Shopify Profits Drain #5: High Customer Churn Rates

Loss of a customer is known as customer churn and you’re going to want to keep your churn rate as low as possible. If you didn’t know, it costs 5 times more to acquire a new customer than to retain an existing one. That being the case, you should keep in mind that improving your customer retention will lead to an increase in your Shopify store’s profits.


There are a few things you can do minimize your customer churn rate:

  1. Invest in customer support to give your customers an unforgettable end-to-end experience
  2. Look for ways to delight your customers in everything from delivery speed to site speed 
  3. Provide multiple options of products, payment methods, and delivery speeds.


Keep your Shopify profit tank full

Maximizing your Shopify profits doesn’t need to be as daunting as it sounds. As with most things in our technological reality, automation simplifies even the most challenging tasks. With a Shopify profit calculator, you can put a plug into all these profit drains and optimize your store in 2021.

Disclaimer: The information contained in this article is provided for informational purposes only, should not be construed as legal advice on any subject matter and should not be relied upon as such. The author accepts no responsibility for any consequences whatsoever arising from the use of such information.