Most Profitable Products: eCommerce Guide to Finding Yours

The most profitable products eCommerce stores sell are not always the bestsellers or the items with the highest price. They are the products that leave the most money after every cost they cause: the product itself, shipping, payment fees, returns, discounts and the marketing it takes to sell them. When you develop your marketing strategy, you need to know the cost and the profit of every product in your portfolio, so you know where your focus should go.

This guide covers profit vs revenue, a worked example, a seven-step product profitability analysis and the products that bring in your most valuable customers. Omniconvert Commander (formerly Nexus), the AI eCommerce growth engine, calculates True Profit per order and per customer from your store data.

Why do you need to know your most profitable products?

If you invest a bit of time to understand the profit behind each product, you will be able to:

• Make better business decisions that improve your store's overall profitability in a sustainable way.
• Optimize your marketing strategies to reach the right audience, at the right time, with the products they are looking for.
• Allocate your marketing budget better and increase your return on investment.
• Find the areas of your business that are good candidates for expansion.
• Manage the prices of your products, up or down, to increase profit. In an ideal scenario, you raise a price and keep (or even increase) market interest.
• Find the products that waste your time and remove them from your portfolio.
• Reduce stock by selling less profitable products in bundles with more profitable ones.
• Choose the right products for upselling and cross-selling, based on what each one adds to profit.

Profit vs revenue: how to calculate product profitability

Many business owners still mix up profit and revenue. Revenue is the total amount of money that comes into your business: the money you see in your bank account before you pay the bills. If you sell a product for $15, you have made $15 of revenue. To find the profit, subtract the costs of selling that product from the revenue. The equation is simple:

The hard part is the cost side. Two kinds of cost go into it.

Direct costs

Direct costs are the costs you can tie to one product: the price you paid to buy it or the materials to make it, plus the wages of the people who produce it (if applicable). In eCommerce, add the costs that come with every order of that product: packaging, shipping and fulfillment, payment fees, discounts, the cost of returns, and the ad spend you need to sell it.

Indirect costs

Indirect costs, also known as overhead, are the ongoing costs of running the business: brand marketing, website hosting, apps, storage and digital maintenance. They are harder to allocate to one product, so take a bird's eye view of the whole business and make your estimates as accurate as possible.

Contribution margin is defined as the revenue a product brings in minus all the variable costs of selling it, before overhead. It tells you what each sale adds toward your fixed costs and profit. Gross margin (price minus the cost of goods) ignores the costs that differ most between products. The gross margin vs net margin guide explains each level, and ROAS vs True Profit vs contribution margin shows why ad metrics alone do not tell you which products earn money.

How to calculate profit per product: a worked example

Take an online home and kitchen store with three products. The numbers are illustrative.

On gross margin per unit, the standing desk wins easily: $150 against $26 and $9. After shipping, returns and ads, it adds only $32 per unit and $3,840 a month, the lowest total. The water bottle earns the most, because a solid contribution per unit meets steady volume. The cleaning refill earns just $3 per unit, but customers order refills again. That last point is why you need a customer view too (see products that drive CLV).

How to find profitable products: a product profitability analysis in 7 steps

1. Export 12 months of order data by product

   Pull revenue, units, discounts and refunds per product or SKU. A full year smooths out seasonal peaks and one-off promotions.
2. Subtract the cost of goods

   Use the landed cost: the purchase price plus freight, duties and packaging. The result is gross margin per unit.
3. Subtract the variable costs of each sale

   Take off shipping and fulfillment, payment fees, the cost of returns and the ad spend you can attribute to the product. The result is contribution per unit.
4. Multiply by units sold and rank

   Total contribution shows which products carry your profit. Rank by it, and keep contribution per unit next to it so you can see why each product lands where it does.
5. Allocate overhead with care

   If you allocate overhead, use a driver that reflects real use, such as storage space or support tickets. An even split by revenue makes every product look alike and hides the ones that use more of your resources.
6. Add the customer view

   Group customers by the product in their first order. Compare their repeat purchase rate, average order value and lifetime value.
7. Decide what to do with each product

   Protect, promote, reprice, bundle or remove. The table in what to do with the results gives a starting point for each case.

Repeat the analysis every quarter, because supplier prices, carrier rates and ad costs change.

The mistake practitioners hit most often here is ranking products by the margin in the product feed: price minus cost of goods. Shipping, returns and ad spend never enter that number, so a bulky, often-returned product with a 50% markup looks like a winner. The team moves ad budget behind it, sales go up, and total profit goes down, because each extra unit adds less than the ads cost to sell it. The error shows up weeks later, when the budget is already spent. An eCommerce profit and loss statement by product line catches it early.

Products that drive CLV: look past the first order

An analysis that stops at the first order misses half the picture. Customer lifetime value is the total value a customer brings over the whole relationship. Some products bring in one-time bargain hunters; others bring in customers who come back every month.

An entry product is defined as the product a customer buys in their first order with your store. To find yours, group customers by their entry product and compare how many orders they place, how much they spend and how much profit they leave over 12 months. In the worked example above, the cleaning refill earns only $3 per unit. If its buyers reorder every month and add other products to their baskets, it may be the most valuable product in the store.

Two more views help here. Product affinity shows which products customers buy together, which tells you what to bundle and what to recommend. And knowing how to find your value shoppers shows you which customers carry your profit, so you can see the products they start with. A customer profitability analysis joins the two: profitable products and profitable customers.

This is where Omniconvert Commander helps. It calculates True Profit per order and per customer, and customer lifetime value, so you can compare customers by the products they bought and see which ones really earn money after costs.

What else to take into account when choosing profitable products

The price point

Does the price point matter, as long as you have high margins? It does. Phone cases that you buy for 10 cents and sell for $1 each have a huge margin, but you still make less than a dollar on each sale.

To make a real profit in a short time, aim for products that bring in larger amounts per order. The trade-off: the higher the price, the harder it is to convert visitors into customers. Would you rather spend a month selling one product worth several thousand dollars, or hundreds of low-cost items? There is no right or wrong answer, but decide which course suits your store.

The size and weight

The ideal online store holds no stock: it connects the customer with the producer. Not every business model works like that, so many store owners keep physical stock.

That is why products that are worth a lot but weigh little and take little space are ideal. Storage costs money, and carriers often charge by package size (dimensional weight) as well as by weight. Mobile phones are a good example: valuable stock in a small space. Their weak point is fragility, so packaging and damage costs count too.

Returns belong in the same check. Retailers expect 19.3% of online sales to be returned in 2025 [National Retail Federation, 2025], and a bulky product costs more to ship back than a small one. See how to reduce eCommerce returns for the products where returns eat the margin.

The popularity

Have you found an amazing product that your potential customers have never heard of? Unless it is your own invention, or something you want to invest a lot of time and money in, stay away from it. Few products take off the moment they launch. Most need time, a large advertising budget and patience, and if the market does not want a product, it cannot succeed.

To turn a profit quickly, focus on products that are in demand now. Check the "most popular products" lists on large marketplaces such as Amazon, watch social media, and use search tools such as Google Trends. If you know Amazon sellers, ask them too. Either way, do product research on a regular schedule.

The competitiveness

Once you know a product is popular, ask how popular. If supply on the online marketplaces is already at its peak, it will be hard to stand out and win a relevant share of the market.

So either find the sweet spot, when a product is rising in popularity but the market is not yet saturated, or find a different way to sell a product customers can already buy elsewhere: sell packs or product bundles, use creative marketing, or add something new to the basic product.

What to do with your product profitability analysis

Pricing is the fastest lever: a small price increase on a high-volume product goes straight to profit if demand holds. Loss leader pricing only works when you know which profitable products the loss leader sells. Cross-sells and upsells are the second lever (see these cross-selling and upselling strategies). For the link between product margin and customer value, see how to calculate and increase eCommerce profit margin through CLV.

Real-world example: more customers from the same traffic

Ad spend per unit is one of the largest costs in a product profitability analysis, and conversion rate decides it. AliveCor used Omniconvert to run a structured A/B testing program and achieved a 21 percent lift in conversion rate, a 5 percent lift in revenue per visitor, and 94 percent statistical relevance across their experiments [Omniconvert, AliveCor case study]. A higher conversion rate turns the same traffic and the same spend into more sales, so the ad cost carried by each unit goes down and contribution per unit goes up. Start testing on the product pages of your stars and hidden earners, where a lift adds the most profit.

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