Why is my profit showing as negative?

Why is my profit showing as negative?

A negative profit in Jarbas can happen for several reasons, usually related to how profit margins are calculated or to incorrect product data. Below, we explain the most common causes — and how to fix them.

How profit is calculated

The system uses the following formula:

Profit = (Sale Price - Discount) - Cost Price

Jarbas takes into account:

  • The product’s sale price
  • Discounts applied to the order
  • The cost price entered in the product details

Main causes of negative profit

1. Missing or zero cost price

  • If a product has no cost price registered (null or zero), the system assumes the cost is $0.00.
  • In that case, profit is calculated as the sale price minus the discount.
  • If the discount is greater than the sale price, the result will be a negative profit.

Example:

Sale price: $10.00
Discount: $12.00
→ Profit: -$2.00

2. Cost price higher than sale price

  • Happens when the cost price of the product is higher than its sale price.
  • This may occur due to:
    • Incorrect product setup
    • Promotions with prices below cost
    • Price adjustments without updating the cost

Tip:
The system displays a warning message:

“The cost price is higher than the sale price. Is this correct?”

3. Excessive discounts

  • Large discounts can reduce the net sale value below the product’s cost.

Example:

Cost: $10.00
Sale: $15.00
Discount: $8.00
→ Profit: -$3.00

4. Products with variations

  • When a product has variations (such as size or color), each variation can have a different cost price.
  • The system always uses the specific variation’s cost price for calculations.

How to check and fix the issue

1. Identify products with incorrect data

  • Go to Products in the main menu.
  • Check for products with a zero cost price or a cost price higher than the sale price.
  • The system will display alerts when these situations occur.

2. Correct the information

  • Add the cost price:
    Edit the product and enter the correct cost.
  • Adjust sale prices:
    Make sure the sale price is higher than the cost.
  • Review discounts:
    Ensure that discounts applied aren’t too large.

Important:
Updating the cost or sale price does not affect existing orders.
To correct older orders, manually edit the cost price of the items within the order.

Financial control tip

Always keep your cost prices up to date. This helps you:

  • Calculate your profit margins accurately
  • Make smarter decisions about pricing and discounts
  • Generate more reliable financial reports
  • Avoid unexpected negative profits

Note

A negative profit can be intentional in certain cases — for example, during clearance or promotional sales. Just make sure these cases are planned and monitored so you can maintain proper financial control.

    • Related Articles

    • What’s the Difference Between Markup and Profit Margin?

      When setting prices for your products or services, many small business owners mix up two key concepts: Markup and Profit Margin. They’re closely related to profit, but they’re not the same. Let’s break them down with simple, real-world examples. What ...

    • What are financial categories for?

      In Jarbas, financial categories help you organize and classify your financial transactions by type or purpose. They make it easier to track, analyze, and understand your business’s income and expenses. Main functions of categories 1. Transaction ...

    • Why can’t I delete a financial category?

      Default financial categories in Jarbas can’t be deleted because they’re essential for the system to function properly. Which categories can’t be deleted Default Income Categories • Sales • Service • Salary • Investment • Bonus • Customer Account • ...

    • How to View Financial Transactions by Payment Method

      In Jarbas, you can filter your financial transactions by payment method — such as cash, Pix, credit card, debit card, bank transfer, and more. This helps you understand how your customers are paying and makes it easier to track your cash flow. Below ...

    • Does Each New Payment Generate Revenue in Jarbas's Financial Section?

      Yes, that's exactly how it works. Every time you log a payment received from a client, that transaction is automatically categorized as Revenue in the financial section of Jarbas. To make managing your finances easier, remember to use the available ...