Glossary

The vocabulary, defined and taught

Every term Profitscaler uses, in plain language. If a word here still intimidates after you have read its row, that is our failure and we would like to hear about it.

Measuring profit

The costs

The plumbing

Measuring profit

Net revenue

What the customer paid, before costs

The order total excluding VAT. Also defined as the sum of all sold products prices after VAT and discounts. Whether your store sends revenue including or excluding VAT is a setting in Profitscaler, and getting it wrong shifts every figure downstream.

GM1

Gross margin after cost of goods

Net revenue minus what the goods cost, with supplier rebates netted off, as a share of net revenue.

GM2

Gross margin after all order costs

GM1 minus shipping, payment fees and handling. When Profitscaler says profit margin, this is the number we mean.

There are multiple levels to gross margin rather than one because they answer different questions, and a store needs them all. A store can hold GM1 steady while GM2 falls. A single "margin" figure hides exactly which one.

GP2

Gross profit after order costs, in money rather than percent

The gross profit of one line item after every order-level cost has been allocated to it. An order's profit is the sum of its lines' GP2 and never a separate calculation, which is why the order report and the SKU report reconcile exactly, down to the last cent.

GP3

Profit after advertising

Order GP2 minus the ad cost of acquiring the order. Measurable in total or across traffic channels. Not directly attributable to individual SKUs.

Projected GM2

Tomorrow's product margin, predicted today

A forward-looking estimate of an item's GM2, projected per item in real time. Prices and discounts move daily, so a margin measured yesterday is not automatically today's margin. The projection is the figure that campaign segmentation can safely act on, and it is why the projected-margin feed exists at all.

ROAS

Return on ad spend

Revenue divided by ad cost. The standard metric, and the blind spot Profitscaler exists for: it counts every unit of revenue the same, so a discounted low-margin order and a full-price high-margin one look identical to your bidding. Bidding algorithms try to maximise your revenue (and your ad spend) as long as it keeps hitting the target ROAS.

POAS

Profit on ad spend

Profit divided by ad cost. The category's answer to what ROAS cannot see: the same ratio computed on what an order actually earned rather than what it invoiced.

Bidding on profit directly is right for some stores and wrong for others, which is why Profitscaler measures profit whether or not you choose to bid on it.

The costs

COGS

Cost of goods sold

What a unit costs you, per SKU. Profitscaler reads it from your product feed on a daily sync, which makes the feed the one place cost prices have to live. Our calculation assumes this value excludes VAT.

Stated margin

A margin you declare, instead of uploaded COGS

When a feed carries no cost prices, you can state a margin per brand or category and Profitscaler works the cost back from it. Many retailers don't have COGS in a product feed, but nearly all know that one brand runs about 33% and another about 45%.

It's not as accurate as exact COGS numbers, but it's far better than nothing and a good starting point.

Fallback margin

The estimate for products you cannot price at all

The margin applied to SKUs your cost data does not cover, so an unknown product gets a sensible estimate instead of a fake 100% margin. Profitscaler shows you the coverage before you commit: how many SKUs can be priced and which cannot. A catalogue that mostly falls back is getting an estimate, and we would rather tell you that than sell you the number.

Extra costs

Your own costs, charged where they are actually incurred

Costs you add yourself, per order, per item or per row. Per-item and per-row costs are charged directly to the line they belong to; order-level costs are allocated across lines by net-revenue share, with the last line absorbing the rounding remainder so the lines still sum to the order.

Most often used for pick and pack fees or fulfilment labour costs.

Kickback / Rebate

Money your supplier gives back, shown as "supplier rebates" in the app

A per-unit rebate from a supplier, added back to the line it belongs to. Kickbacks sit inside GM1 rather than below it, because a rebate reduces what the goods cost rather than paying for fulfilment. Ignoring them understates margin on exactly the products where a supplier deal is what makes advertising viable.

The plumbing

Server-side GTM container

A Google Tag Manager container that runs on a server

The one thing Profitscaler cannot work without. It turns a purchase into a server-to-server request carrying line items, which is what makes the profit value calculation possible at all.

Who hosts it is your choice and changes nothing: Taggrs, Stape, Google Cloud Run, or one you run yourself.

Conversion value

The number your bidding tries to maximise

The value a tag sends alongside a conversion event. Google Ads Smart Bidding treats it as the number to optimise toward. Send revenue and you buy revenue, send profit and you instead buy profit.

Profitscaler sends profit as the conversion value in a profit conversion. Negative values are floored at 1, because Google Ads rejects negatives outright and a zero would be counted as a real conversion carrying no value.

Margin buckets

Your product feed, grouped by margin

Custom labels on a supplementary feed that group products into margin bands, so ad campaigns can bid based on product margin.

Commonly using GM1 (margin after COGS) as basis. Profitscaler supports using projected GM2 as basis instead.

Parallel run

Both numbers, on the same orders, before anything changes

Profit tracking running beside your existing revenue tracking, on the same orders, so you can see what the honest figure looks like before anything bids on it.

Sometimes the right answer after a parallel run is not to switch, and to fix the feed instead.

Report key

The key on an export URL, separate from every other key you hold

Each CSV export URL carries its own key, which is what lets you hand a reporting tool a URL without handing it anything else. Keys are per account and per purpose, and you can rotate any of them yourself in minutes.

Anyone who can open a document containing that URL can read that store's aggregates, which is why it is separate from the key your container uses and why rotation is self-service.

Custom labels

Product feed attribute used for segmenting products

A product feed attribute supported by most ad platforms. Commonly used to segment products into separate ad campaigns.

The vocabulary, defined and taught

Measuring profit

Measuring profit

Net revenue

GM1

GM2

GP2

GP3

Projected GM2

ROAS

POAS

The costs

The costs

COGS

Stated margin

Fallback margin

Extra costs

Kickback / Rebate

The plumbing

The plumbing

Server-side GTM container

Conversion value

Margin buckets

Parallel run

Report key

Custom labels

Find out what your orders are actually worth

Find out what your orders are actually worth

Find out what your orders are actually worth