Revenue isn't profit: why stores that sell more on Mercado Livre sometimes earn less

Revenue is what the buyer pays. Profit is what’s left after the product, commission, shipping, tax, listing, returns, and fixed expenses. On marketplaces, profit is usually between 5% and 15% of revenue, when it’s positive, so the two numbers can move in opposite directions. One store ran a 10% promotion on its best-selling product and increased revenue by 31% that month while earning 16% less profit.

The Mercado Livre and Shopee dashboards put revenue front and center. It’s the number everyone celebrates—and the one that says the least about a store’s health. Here’s how the numbers work and the four main reasons revenue and profit diverge.

#The math: more revenue, less profit

A store with two products on Mercado Livre and a 6% tax rate:

• Product A: R$ 59,90, 400 g, cost R$ 28, with 10% of the price spent on Ads. Profit of R$ 6,28 per sale.
• Product B: R$ 129,90, 600 g, cost R$ 60, with 4% spent on Ads. Profit of R$ 21,67 per sale.

The promotion nearly doubled sales of product A. But profit per unit fell from R$ 6,28 to R$ 1,97 because the discount came entirely out of the margin, which was already thin due to advertising. The store worked harder, shipped 500 more orders, and made R$ 1.600 less.

#The four most common reasons

1. Discounting a product with a thin margin. A 10% discount on a product with a 10% margin wipes out nearly all the profit because the cost and shipping don't go down with the price. I break down the math in how to calculate profit and profit percentage.

2. More ads driving up the cost of sales. Increasing your Mercado Ads or Shopee Ads budget almost always increases revenue. If ROAS falls below the product's break-even point, every new sale costs you money. See the ROAS table by margin in Mercado Livre Ads in 2026.

3. A worsening product mix. If low-priced products with thin margins grow faster than higher-priced products with healthy margins, revenue goes up while average margin falls. The ABC curve by profit, not revenue, makes this clear: ABC curve.

4. Costs that grow with your store. Under Simples, the effective tax rate rises with revenue over the last 12 months. More sales also mean more returns and, sometimes, more people handling fulfillment. See the impact of tax in the tax that rises on its own.

In practice. A supplement seller had their best year ever for revenue, up 40% from the year before, but ended with less cash on hand. Looking at the year month by month revealed three things happening at once: ad spend had risen from 5% to 11% of revenue, half of new sales came from promotional bundles with margins below 8%, and the Simples tax rate had risen by two percentage points. None of this showed up on the sales dashboard. All of it showed up in profit.

#The same revenue, three different profits

Three stores each made R$ 100 mil in revenue in the same month, with the same 6% tax rate and the same R$ 9 mil in fixed expenses:

All three have the same revenue. Store A gets better prices from suppliers, sells products with lower shipping costs, and advertises strategically. Store C sells cheap, heavy products with high ad spend—and pays to do the work. No sales dashboard would show the difference.

#What to track instead of revenue

Revenue is still useful for measuring business size and market share. It just shouldn't be the number you use to decide on promotions, ads, or stock purchases. Learn about the different margin levels in gross, contribution, and net margin, and about the break-even point in the online store break-even point.

#A rule for deciding on promotions and ads

Before taking any action to increase sales, ask: how much additional profit will this action generate—not revenue? Calculate profit per unit after the action, multiply it by the expected sales volume, and compare it with your current profit. If the action doesn't beat your current profit by a reasonable margin, it just creates more work.

#Revenue and profit side by side

The practical problem is that revenue appears on every dashboard, while profit appears on none. Milewa puts them side by side: it pulls orders from Mercado Livre and Shopee, applies commission, shipping, cost, tax, and the Ads for each listing, then shows the profit for every order, product, and month. When revenue goes up but profit doesn't keep pace, you can see which product and action explain the difference.