How to track product profit margins in WooCommerce

For gross product margin, use (net sales - cost of goods sold) / net sales × 100. Net sales should account for discounts and refunds. This is not the same as net profit, because payment fees, advertising, wages, software, tax and overhead may still be outside the calculation. WooCommerce defines net sales as gross sales minus returns and coupons.

Decide what belongs in your unit cost before entering numbers. For a physical product, this may include the supplier price, manufacturing cost and directly attributable packaging. Keep shipping charged to the customer, sales tax and payment fees separate unless your accounting method deliberately includes them.

The manual route is fine for a small catalogue or a shop with occasional orders. Create columns for SKU, product or variation, selling price, unit cost, units sold, discounts, refunds, net sales, COGS, gross profit and margin percentage.

Calculate COGS as unit cost × quantity sold, then calculate gross profit as net sales - COGS. The drawback is that you must export or enter order data, keep variation costs in sync and handle refunds consistently. It also will not give you a live margin view inside WooCommerce.

If your WooCommerce version includes the native feature, go to WooCommerce > Settings > Advanced > Features, enable Cost of Goods Sold, and save. WooCommerce then adds a cost field to product editing screens and stores cost information with order items.

Enter the cost of a simple product in its product data. For a variable product, set a default cost or enter a separate cost for each variation. The native feature records order-item COGS, but its documentation currently says that COGS is not integrated into WooCommerce Analytics, so you may still need an export or reporting extension for margin tables and trends.

Use your current landed unit cost, not the retail price or the amount paid by the customer. For variations, do not assume that every size, colour or pack has the same cost unless that is actually true. WooCommerce’s COGS tools support a default variation cost with individual overrides.

Check the catalogue for products left at zero cost. A zero cost makes the product look completely profitable. If costs change over time, update the product for new orders but avoid overwriting historical order costs unless you intentionally want to recalculate old results. Stored order costs are designed to preserve the cost at the time of the order.

Decide which order statuses count as sales. Exclude cancelled, failed and unpaid orders, and check how your tool treats refunds. A refunded product should reduce both sales and its associated cost, otherwise the margin will be overstated.

Review whether shipping, tax and checkout fees should be excluded from gross product margin. WooCommerce’s Cost of Goods documentation recommends excluding these by default, but stores may choose differently for their accounting process. Be consistent month to month.

Compare the result against a few real orders. Check a discounted order, a variable product, a partial refund and an order with shipping or tax. A common Friday-afternoon error is changing a product cost and assuming that every previous order has changed too; historical order costs normally remain unchanged unless you deliberately apply an override.

For the fast route, use WooCommerce Cost of Goods. It adds product and variation costs, calculates costs on orders, and provides product, date and category profitability reports. Choose it when a spreadsheet is too slow and WooCommerce sales data alone is not enough. Its reports can show net sales, COGS, profit and average profit for selected periods.