GUIDE

How to calculate profit in a small shop

Sales are not profit. Profit is what is left after paying for the goods you sold, and then for running the shop. Knowing both numbers tells you whether the shop is really making money.

Updated 7 October 2026

Step 1: gross profit

Gross profit is your sales minus what the goods cost you. If you sold sugar for 1,200 a kilo and bought it for 1,000, the gross profit on each kilo is 200.

Step 2: what is left after running costs

Take away the costs of running the shop for the same period: rent, transport, electricity, airtime, a helper's pay. What remains is what the shop earned for you. Money you take home is not a cost of the shop. It is your share, taken from what is left.

A one-week example

Line	Amount
Sales for the week	150,000
Cost of the goods sold	120,000
Gross profit	30,000
Rent for the week	8,000
Transport to buy stock	4,000
Electricity and airtime	3,000
Left after running costs	15,000

The shop sold 150,000 but earned 15,000 for its owner that week. If the owner took 20,000 home, the shop is shrinking, even though sales looked good.

A one-week profit example: sales 150,000, cost of goods 120,000, gross profit 30,000, running costs 15,000, and 15,000 left — One week on paper, from sales to what is left.

Mistakes that hide a loss

Counting money taken home as profit.
Forgetting goods you used at home or gave away.
Counting credit sales as cash before they are paid.
Not knowing what each item cost, so the cost line is a guess.

Let the record do the sums

When every sale and every purchase is written with its cost, gross profit comes from the records, not from memory. Most shop record apps show it for you. Our comparison of shop record apps shows which ones keep reports.

Questions shop owners ask

It differs by product. Basics like sugar and flour earn little on each item, while snacks and household goods often earn more. Know your margin per product, not one number for the whole shop.

Every week is enough for most small shops, and every month at the least.

Profit can be sitting on your shelves as stock, or with customers as credit. Check both before you assume a loss.

More guides: How to keep records in a small shop · What is a credit book, and how to keep one · How to do stock taking in a small shop