How to Know If Your Business Is Selling at a Loss Without Realizing It

Your business may be selling at a loss when net selling prices fall below actual product costs or when gross margins cannot cover selling and operating expenses. Common causes include outdated purchase costs, excessive discounts, overlooked shipping fees, commissions, and returns.

Calculate Unit Gross Profit = Net Selling Price − Cost of Goods Sold per Unit, then consider additional expenses to assess actual profitability. For example, a product costing 85 and selling for 80 generates a gross loss of 5 per unit. Review product profitability reports and update prices regularly. Try Cash Cloud for free to explore sales, inventory, and financial reporting tools.