Ask a shopkeeper “how was business today?” and the answer is usually the day’s sales. But sales are not profit — and confusing the two is the single most expensive mistake in retail. Here is how to find the number that actually matters.
Sales ≠ profit
If you sold Rs. 50,000 today, that is revenue, not earnings. To know what you kept, you have to subtract what those goods cost you and what it cost to run the shop. Two shops with the same sales can have wildly different profit.
The simple profit formula
Work it out in this order:
- Gross profit = selling price − cost price (for everything you sold).
- Minus discounts you gave.
- Minus the impact of returns (refunds eat the profit you had booked).
- Minus expenses — rent, electricity, salaries, transport, packaging.
- Minus bad debts — udhaar you have written off as unrecoverable.
What is left is your net profit — the real money you earned.
Rule of thumb: if you do not know the cost price of what you sell, you cannot know your profit. Recording cost per item is the foundation of every other number.
Why most shopkeepers overstate profit
- They count sales, not margin — ignoring cost of goods.
- They forget discounts and returns, which silently shrink the margin.
- They leave out expenses like electricity and salaries.
- They treat unpaid udhaar as “earned”, even when it may never be collected.
Do it daily, not yearly
Checking profit once a year tells you nothing you can act on. A quick daily figure shows which days, products and discounts actually make you money — and which quietly lose it. Small corrections, made often, compound into a healthier shop.
BazaarMint does this for you. It calculates true daily profit automatically — taking cost, discounts, returns, expenses and bad debts into account — so you never have to guess. Start a free 14-day trial — no card needed.
FAQ
What is the difference between gross profit and net profit?
Gross profit is selling price minus cost price. Net profit is gross profit minus discounts, the impact of returns, running expenses (rent, electricity, salaries) and any bad debts. Net profit is the money you actually keep.
Why are my sales high but profit low?
High sales with low profit usually means thin margins, heavy discounts, high returns, or expenses eating the difference. Recording the cost price of each item and reviewing daily net profit shows exactly where the money is going.
How often should I check my shop profit?
Daily, even if only for a minute. A daily net-profit figure lets you spot bad days, weak products and over-generous discounts early, while there is still time to fix them.