Why Gross Margin Lies to You
You probably see screenshots on Twitter and Facebook of store owners doing $100k months. Many claim they have a "70% margin." What they actually mean is they have a 70% Gross Margin.
The Reality of Net Margins
Once you factor in their $50,000 ad spend, their $5,000 agency retainer, $3,000 in software subscriptions, and $1,500 in chargebacks, their actual take-away amount (Net Profit) is significantly smaller. In ecommerce, a Net Margin of 15% to 25% is incredibly healthy and realistic. If your Net Margins are hitting 30%+, you have a remarkably well-optimized business.