Why Operating Profit Matters in Print-on-Demand (and How to Track It)

If you’re new to profit tracking, check out our Complete Guide to Tracking Profits in POD. It walks through manual vs. automated workflows. For a step-by-step breakdown of formulas, see How to Calculate POD Profits (Step-by-Step). And if you’re ready to see operating profit in real time across Shopify + Printify/Printful, explore PodVector.

What Is Operating Profit?

Operating profit is the money your POD business actually keeps after covering all costs. It’s sometimes called “true profit” or “net operating income.”

Unlike gross profit (which only subtracts product costs), operating profit subtracts everything:

• Product & printing costs (COGS)
• Shipping & fulfillment
• Ad spend (Meta, TikTok, Google, etc.)
• Refunds & chargebacks
• Payment processing fees (Shopify, Stripe, PayPal)

It tells you whether your business is actually making money—not just making sales.

Why Operating Profit Matters More Than Gross Profit

Many POD sellers celebrate a 50% gross profit margin and assume they’re in good shape. But once you subtract ads, refunds, and fees, that margin can collapse to 5%—or negative.

This is why most POD stores aren’t as profitable as they look. Gross profit is a vanity metric if you don’t factor in the real costs.

Operating profit forces you to see the truth. If your operating margin is healthy, your business is sustainable. If it’s thin or negative, you’re essentially paying customers to buy your products.

The Formula for Operating Profit in POD

The formula is simple:

Operating Profit = Revenue – (COGS + Shipping + Ad Spend + Refunds + Fees)

To get the margin, divide operating profit by revenue:

Operating Profit Margin = Operating Profit ÷ Revenue × 100

Example: Hoodie Sales Breakdown

Let’s say you sell 100 hoodies at $50 each. That’s $5,000 in revenue. Here’s what happens after costs:

• COGS: $2,000 (100 × $20)
• Shipping: $600 (100 × $6)
• Ad Spend: $1,200
• Refunds: $150 (3 × $50)
• Fees: ~$230 (2.9% + $0.30/order)

Operating Profit = $5,000 – ($2,000 + $600 + $1,200 + $150 + $230) = $820

Operating Margin = $820 ÷ $5,000 = 16.4%

This looks strong—but margins this high are rare in POD. If ad costs had been $2,000 instead of $1,200, your margin would shrink to just 0.4%. That’s why operating profit is the number that matters most.

The Minimum Operating Profit Margin to Aim For

In POD, a 5–10% operating profit margin is the safe zone. Below 5%, your business is fragile and one bad ad campaign can wipe out profit. Above 10%, you have a cushion and room to reinvest in growth.

This margin range is realistic because POD products have higher fulfillment and shipping costs compared to bulk manufacturing. Hitting 20%+ operating margin is possible, but rare without organic traffic or strong repeat customers.

How to Track Operating Profit Manually

You can calculate operating profit with spreadsheets. Here’s a simple workflow:

1. Pull sales and refunds from Shopify.
2. Pull product & shipping costs from Printify/Printful invoices.
3. Pull ad spend from Meta, TikTok, or Google dashboards.
4. Pull processing fees from Shopify Payments or PayPal reports.
5. Plug into the formula: Revenue – (COGS + Shipping + Ads + Refunds + Fees).

The problem: this process takes hours each week. And the more orders you have, the more complex it becomes.

How to Automate Operating Profit Tracking

Instead of juggling spreadsheets, you can connect Shopify + Printify/Printful + ad accounts to a profit tracking tool. For example, PodVector automatically calculates:

• Gross profit
• Gross profit after marketing (GPAM)
• Operating profit & operating margin
• Profit per order, design, and channel

This lets you see, in real time, which products are profitable and which are losing money. No more guessing, no more waiting until the end of the month.

Using Operating Profit to Make Smarter Decisions

Once you track operating profit, your decision-making changes:

• Pricing: Raise prices if margins are too thin.
• Ad strategy: Scale only the campaigns where GPAM and operating profit are positive.
• Product selection: Focus on designs with higher AOV and lower refund rates.
• Cash flow: Plan confidently, knowing your profit isn’t an illusion.

Operating profit is the only metric that tells you whether your store is actually sustainable.

FAQs

What’s the difference between gross and operating profit?

Gross profit subtracts only product costs. Operating profit subtracts everything—COGS, shipping, ads, refunds, and fees.

What operating profit margin is healthy for POD?

Aim for 5–10%. Below 5% is dangerous; above 10% gives you breathing room.

Can I just use Shopify’s profit reports?

Shopify reports don’t include ad spend or refunds in the full picture. You’ll need spreadsheets or a dedicated tool like PodVector for true operating profit.

Why is my operating profit so much lower than my gross profit?

Because ads, shipping, and fees cut deeper than most sellers expect. That’s why tracking operating profit is non-negotiable.