A skincare product sells for £48 and costs £11.20 to make and get into the warehouse.
Take out VAT and the gross margin is 72% before discounts and refunds. It is the kind of number you would happily put in a pitch deck.
But in the example below, 100 orders leave the brand with minus £7.20 after its ad budget. That is before paying anyone a salary.
There is no dramatic collapse in sales. The money goes on familiar things: refunds, delivery, payment fees and the cost of getting people to buy.
If you are building a consumer brand, the useful question is how much each sale leaves behind, and whether that is enough to run the business.
Below, I work through the numbers, test three changes that could improve them, and explain the four figures I would check every month.
Paid subscribers also get access to the SKU Profit Planner, with a worked skincare example, break-even calculations and stock-reorder checks. You can put your own figures in and see where to focus first.
