Best-Sellers That Lose Money: How to Find Your Least Profitable Shopify Products

Most store owners decide what to promote by looking at one list: best sellers. The products at the top get more ads, more space on the homepage, and more attention. It feels logical, because they are the ones customers want.

But there is a catch. A best seller is not always a profitable one. A product can bring in a lot of revenue, fill your orders page, and still lose money on every sale once shipping, fees, and ad costs are included. If you scale a product like that, you are not growing your business, you are growing your losses.

In this guide, we'll look at how to measure profit per product, walk through a real example, and decide what to do with each type of product.

Sales Rank vs Profit Rank

Your Shopify reports can show you which products sold the most units or the most revenue. That is sales rank. What you really need is profit rank: which products leave the most money after all their costs.

The two lists are often very different. High-volume products tend to be cheaper and more competitive, with thinner margins. Premium or niche products sell fewer units but can earn much more per sale. If you only look at sales rank, you may be promoting the wrong products.

What to Include in Product Profit

To calculate profit per product, include every cost that belongs to it:

• Product cost (COGS)
• Shipping you pay for that product, which can be higher for heavy or bulky items
• Payment fees on its price
• Packaging and handling
• Advertising cost per order for that product
• Discounts applied to it
• Refunds and returns, since some products come back far more often

Profit per order = Price − COGS − Shipping − Fees − Ad cost per order − Other costs

Fixed costs, such as apps and software, are usually looked at for the whole store rather than per product. Per product, focus on costs that change with each order.

A Worked Example

Imagine a store with three products over one month. All use a payment fee of 2.9% + $0.30, and the ad cost per order is taken from each product's campaigns.

Now compare the two rankings.

By revenue: the desk lamp is first with $9,000, then the hoodie, then the phone case.

By units: the phone case is first with 300.

By profit: the hoodie is first with about $1,435, and the desk lamp is last. It loses $322.

The desk lamp is the store's biggest source of revenue, about 40% of all sales, and the only product losing money. The whole store earned about $1,749 in total ($1,435 + $636 − $322). Without the lamp's loss, it would have been around $2,071.

Also look at the phone case. It sells the most units, but it makes only $2.12 per order, a margin of about 10.6%. It is profitable, but a small increase in ad cost or a few refunds could erase it.

The Margin After Ads Tells the Real Story

Here is the margin after ads for each product:

• Hoodie: $11.96 ÷ $60 = 19.9%
• Phone case: $2.12 ÷ $20 = 10.6%
• Desk lamp: −$1.61 ÷ $45 = −3.6%

A product with a negative margin after ads is paying you to sell it, unless it brings other benefits such as repeat customers or add-on sales, which should be proven with data, not assumed.

What to Do With Each Type of Product

Stars: high profit, good volume

Protect and grow them. Increase ad budgets gradually, improve their pages, add bundles, and make sure you never run out of stock.

Hidden gems: high profit, low volume

These are often ignored because they don't appear at the top of the best-seller list. Give them more visibility with better photos, more ads, and a spot on your homepage.

Busy but thin: high volume, low profit

This is the phone case. Don't drop it without thinking, but fix the margin: raise the price slightly, reduce shipping cost, lower ad cost, or sell it as part of a bundle with a higher-margin product.

Losers: lots of sales, negative profit

This is the desk lamp. You have four main options:

1. Raise the price. If the lamp rises from $45 to $52, the fee becomes $1.81 and profit before ads is $19.19. After the $14 ad cost, profit per order is +$5.19 instead of −$1.61. A 15.6% price increase turns the product profitable, as long as sales don't fall too much.
2. Cut costs. Negotiate with the supplier, find lighter packaging, or use a cheaper carrier. The $9 shipping is the largest cost to challenge here.
3. Reduce ad cost. Test new creatives or target better audiences to lower the cost per order.
4. Drop or stop promoting it. If none of the above works, stop spending money on it and use that budget on products that earn.

Check the Rest of the Picture Before Dropping Anything

Be careful not to cut too fast. Before dropping a low-profit product, ask:

• Does it attract customers who buy other things? If a cheap product brings in customers who later buy higher-margin items, it may be worth more than its own profit. Check real repeat-purchase data.
• Is the loss caused by one temporary problem? A supplier price rise or a bad ad week may be fixable.
• Are refunds the real issue? A product with a high return rate may need better descriptions or quality control, not removal.
• Is it a seasonal product? Compare it with the same period last year.

Product-Level Metrics Worth Tracking

For each of your top 10 to 20 products, track:

• Profit per order (before and after ads)
• Margin after ads
• Return and refund rate
• Average discount given
• Share of total revenue vs share of total profit

The last comparison is especially useful. If a product brings 40% of your revenue but only 5% of your profit, it deserves attention.

Common Mistakes

• Choosing winners by sales volume alone
• Using one average cost for every product, even though shipping and fees differ
• Leaving out ad cost when calculating product profit
• Ignoring refunds, which can turn a thin margin negative
• Scaling ads on a product before checking its margin
• Never reviewing old products after costs change

A Simple Monthly Product Review

1. Export your sales by product for the month.
2. Add up each product's real costs: product, shipping, fees, ads, and refunds.
3. Calculate profit per order and total profit for each.
4. Rank products by profit, not by sales.
5. Choose one action for each: grow, fix, reprice, or stop.

Doing this in a spreadsheet works at first, but it becomes slow with many products and variants. Tools like Syncost can show profit per order and per product from your Shopify data, which makes it much easier to see which items earn money.

Key Takeaways

• A best seller is not always a profitable product.
• Rank products by profit after all costs, including shipping, fees, ads, and refunds.
• Compare each product's share of revenue with its share of profit.
• Fix weak products with higher prices, lower costs, lower ad costs, or bundles, before dropping them.
• Stop promoting products that lose money, unless data shows they bring other value.
• Review product profit every month, since costs and prices change.

The best question to ask about any product isn't "does it sell?" but "does it make me money?" This week, take your top five sellers, calculate their profit per order, and you may be surprised by what you find.