However, that’s not all. There are also fixed costs to consider.
We talked about about all the marketing requirements to drive traffic to the store and to generate sales through market research, brand identity and digital media These all come with costs which the stores sales need to cover.
There are also a number of other operational fixed costs to consider.
For example, do you own the warehouse where your goods are stored? If so, what about all the costs associated with storage such as staffing, security and utility bills? Even if you rent space in someone else’s warehouse, your rent is an on-going fixed cost you need to pay, whether you sell or not.
What about the website you set up to run your online store? You need to consider operational costs like server hosting and maintaining the URL license. Then you need to consider costs to generate content. If you need to create photography, video or write sales copy, each of these takes time and money to produce. That doesn’t even take into account the time and effort to set up and design the website in the first place.
As we mentioned above in the section on payments, there are also the costs associated with chargeback and fraudulent transactions. These costs will also appear as part of the “debit” section of your profit and loss account.
But once you factor all those in, then you get to the reason why you set up an online store in the first place.
Because, what’s left is your profit.