% Custom Expenses
How much of every sale disappears into the cost of running the shop.
What it means
% Custom Expenses is the share of Total Sales taken by the costs you enter yourself on Cost Settings — rent, payroll, software, agency fees. Stock and postage aren't in it; they have their own lines. Spend €18,000 running a shop that took €120,000 and it reads 15%.
Show the math
Formula and a worked example
Custom Expenses is your fixed and variable entries from Cost Settings, added together for the period.
Total Sales is everything you took in, including tax and delivery charges.
Worked example. March: €18,000 of expenses against €120,000 of Total Sales. % Custom Expenses = 18,000 ÷ 120,000 = 15% — past the 12% healthy line, but well clear of the 30% one.
April is quiet — €90,000 of sales, and not one expense changed. The same €18,000 now reads 20%. Nobody overspent; the shop got smaller underneath a cost base that didn't move.
It answers the question
Is the business big enough to carry what it costs to run? Under 12% the overhead sits comfortably; past 30% the shop is mostly working to pay for itself.
Why it matters
It's the fastest read on whether your cost base fits your size. Every margin above it can look fine while this one quietly decides whether the year ends in profit.
Rent is agreed once and charged forever, whatever the weather does to your footfall. A quiet quarter renegotiates nothing, which is why this climbs hardest in the months you can least afford it and drags Net Profit MarginNet Profit MarginWhat you keep after every cost; the truest read on health.15% or more is healthy down with it.
What good looks like
These bands assume the expense list is complete. A shop reading 3% has usually entered its software and forgotten its payroll, so check the list before you trust the colour. The mix matters too: a cost base that's mostly variable can sit higher here safely, because the bill shrinks when sales do.
How to improve it
| Lever | What you do | Expect | How long | Watch out for |
|---|---|---|---|---|
| Fast Cancel what nobody uses | Audit the recurring software and app fees in your expense list | 0.5–2 points off | 1–2 weeks | A few of those tools hold a flow or a product feed together. One wrong cancellation costs more revenue than the fees ever saved. |
| Fast Put the agency on a percentage | Swap flat retainers for a share of sales so the cost moves with the month | 1–3 points off in slow months | 1 month | Strong months get more expensive, and a growing year can total more than the retainer would have. |
| Slow Re-tender the single biggest line | Take warehousing, fulfilment or the agency to two competitors before renewal | 2–4 points off | 1 quarter | Switching partners costs weeks of ramp-up and service dips through the handover — complaints and refunds usually rise before the saving lands. |
| Slow Grow the denominator | Add sales without adding people, space or tools | Falls with every point of growth, no cuts required | 1–2 quarters | Growth bought with ads doesn't help evenly — this improves while Contribution Margin can fall, because the acquisition cost lands in a different line. |
Every lever costs something somewhere. The last column is the one to read twice.
Read it with
A percentage moves when either half moves. Reading it against sales is what tells you which one did.
Growing into your costs
Sales outgrew the overhead. Every point this falls lands on Net Profit without a single cost being cut.
Costs growing with the shop
You spent to grow and spent slightly faster than you grew. Fine for a quarter you planned; a habit if it repeats.
Trimmed to fit
Costs fell faster than sales, so the shop stayed in proportion through a quieter month. Controlled, not comfortable.
Overhead on a shrinking shop
Nothing was overspent — the sales just weren't there. Fixed costs don't shrink on their own, which is how a slow month turns into a loss.
Contribution Margin says what each sale leaves behind; this says what the shop takes off the top before any of it counts. A 30% Contribution Margin against 12% here leaves real profit, and the same 30% against 28% leaves almost nothing.
The euro total flat while the share climbs tells you sales fell rather than costs rising — a demand problem, not a spending one. They point at completely different fixes, and the percentage alone can't tell you which you have.
Common misreads
A reading far below the 12% line usually means an incomplete expense list, not a lean shop. Check payroll and rent are actually entered before you enjoy the number.
Total Sales sit in the denominator. A flat expense list against a slow month pushes this up with no new spending anywhere. Read the euro total next to it before you go looking for a culprit.
Past a point, a very low reading means you're under-investing in the people and tools the shop needs to grow. The goal is a cost base that fits your size, not the smallest one you can survive on.
Also called
Operating expense ratio · OPEX ratio · overhead as a share of sales
See yoursYour % Custom Expenses for the period, and the entries making up the total.
Open Shopify Profit →