Sales up but profit down: how a 20% voucher doubled sales and cut profit by 17%
Sales up but profit down? Follow one 20% shop voucher order by order: it doubled sales, profit still fell 17%, and the reason is a sum you can run on your own products before the next promo.
Sales up but profit down, with more orders than last month, means each order now leaves you less than before. Look at your shop vouchers first. You pay for a shop voucher yourself, so it comes out of your margin, the part of the price you keep after costs, not out of your price. In the sum below, one 20% voucher cut what each order kept from 24 to 8, so 250 orders kept less than 100 had.
What the sales report shows
The sum works the same in any currency. Last month you had 100 orders and 10,000 in sales, the total your buyers paid. This month a 20% shop voucher ran. Orders went from 100 to 250, up 150%, and sales doubled to 20,000. On the sales report it looks like a win.
But a sales report shows only sales and orders, not what each order cost you. For that you need the profit of each order: what is left after the platform fees, which the marketplace takes from every order as commission and service fees, and after the cost of the product.
A shop voucher comes out of your margin
A shop voucher is a discount you create for your own store in Seller Centre, and you pay for it, not the platform. With a 20% voucher, a product with a normal price of 100 sells for 80, and the missing 20 is yours to cover.
That 20 does not come out of the price. It comes out of your margin, which is much smaller. Here the product costs 56 to make and the fees take their share, so a voucher that sounds small against the price takes a large bite of what you keep.
One order, before and after the voucher
Take one order and follow the money. Without the voucher, you keep 24 of the 100 the buyer pays, which is 24% of the price. With it, the buyer pays 80. Here the fees are a share of what the buyer pays, so they fall from 20 to 16, and you keep 8, which is 10% of what was paid.
| Per order | No voucher | 20% voucher |
|---|---|---|
| Normal price | 100 | 100 |
| Voucher, paid by you | 0 | -20 |
| The buyer pays | 100 | 80 |
| Platform fees | -20 | -16 |
| Product cost | -56 | -56 |
| You keep | 24 | 8 |
The fees fell by 4 and the voucher cost 20. Your own fee rates differ by category; they are in the income details of each order in Seller Centre.
So each order keeps 16 less. Two thirds of what you kept is gone, on a discount of one fifth of the price. That is the margin of 10% that a sales report never shows.
Check which price your own fees are worked out on: a fee worked out on the price before the voucher does not fall at all, and the order keeps even less. Our earlier post, why a voucher can lose you money after fees, runs the same sum in rupiah.
Why sales went up but profit went down
Now multiply by the orders. Last month, 100 orders kept 24 each: 2,400. This month, 250 orders kept 8 each: 2,000. Sales doubled, and profit fell by 400, or 17%. More orders and more work, for less money.
| Per month | Last month | Voucher month |
|---|---|---|
| Orders | 100 | 250 |
| Sales | 10,000 | 20,000 |
| Kept per order | 24 | 8 |
| Profit | 2,400 | 2,000 |
Orders up 150% and sales doubled, while profit fell 17%. That is before ads and commission.
To keep the same 2,400 at 8 an order, the voucher month needed 300 orders, three times the 100 of last month. It brought 250. That is the sum for any voucher: divide what you kept without it by what one order keeps with it, and you have the orders it needs to break even.
And the 2,000 is before ads and commission. If the month also paid for ads, or for affiliates, creators who earn a commission on each sale they bring through their link, every order keeps less again.
A sales report shows what was sold. Only the sum per order shows what you kept.
How to work out profit per order before your next voucher
Before the next voucher, do one sum for each product it covers. Take the fees from a recent order of that product, in its income details under My Income in Seller Centre, and the product cost from your own records.
- The price after the voucher: what the buyer actually pays.
- Less the platform fees on that price, which differ by category and by the programmes you join.
- Less the product cost, and the packing if you count it on its own.
- Less the ad cost per order, which is the ad spend divided by the orders it brought, and the commission. To see the ad cost of each product, give each product an ad of its own.
- What is left is the profit per order.
Then let the answer decide.
- Keeps a healthy amount, like 24 an order: run the voucher.
- Keeps little, like 8 an order: cap it with a maximum discount, a minimum spend or a smaller percentage.
- Keeps next to nothing, or less: fix that product first, before any voucher touches it.
What to check this week
- Open My Income in Seller Centre and pick a recent order of each product that ran with a voucher.
- Work out what each order kept, and do the same for an order of the same product without one.
- Multiply both by the orders of their month, to see whether the voucher month kept more or less.
- Cap or end any voucher whose orders keep little or nothing, before it runs again.
A margin check does this for every product at once. It shows the share of the price each product keeps, and lists a product twice when a voucher is planned for it.
| Product | Margin |
|---|---|
| USB C hub | 30.0% |
| Charger 20W | 33.3% |
| Powerbank 10,000 mAh | 25.0% |
| Earbuds, no voucher | 24.0% |
| Earbuds, with voucher | -5.9% |
The earbuds keep 24.0% of the price without a voucher and fall below zero with one. A voucher like that is flagged before it runs.
In our Marketplace Marketing and Margin Control package, we run that check on up to 50 of your products and check every promo against your margin before it runs. To see where your own store stands first, try the store check: ten questions, about two minutes.
Questions sellers ask
Why are my sales up but my profit down?
If your orders are up too, each order keeps less than it did. When a voucher, a fee or an ad cost takes a bigger share of every order, more orders can add up to less profit. Above, 250 orders kept 2,000 where 100 orders had kept 2,400.
Who pays for a Shopee shop voucher?
You do. A shop voucher is one you create for your own store, and its value comes off what the buyer pays you. Vouchers the marketplace runs itself work differently. The income details of each order, under My Income in Seller Centre, show which discounts came out of your money.
How do I calculate profit per order on Shopee?
Start with what the buyer paid after vouchers. Take away the platform fees, the product cost and packing, and the ad cost and commission for that order. What is left is your profit per order. Read the fees off a recent order under My Income in Seller Centre.
How many more orders does a voucher need to break even?
Divide what you kept in total without the voucher by what one order keeps with it. Here, 2,400 divided by 8 is 300 orders, three times the 100 of the month before. Fewer than that, and the month keeps less, however good the sales look.
Should I stop running vouchers?
Not necessarily. A voucher can be worth running when each order still keeps enough, or when it has a clear job, such as the first sales of a new product. Check it first, cap it where the margin is thin, and leave out the products that keep little.