What is the reality of owning a 1 crore rupee per year online business? What are the numbers? How much do you really make with a 1 crore e-commerce business in Pakistan?

I wanted to break down what a typical 1 crore rupees per year e-commerce business looks like.

Why 10,000,000?

1 Crore is 10 million rupees. And 1 crore is considered a milestone for many people.

I hope to share this with you so you can:

• Have a proper understanding of the costs of running an e-commerce business
• Get inspired to take the right kind of action
• Understand that “grass is greener on the other side” is sometimes true, sometime not that true.

OK, let’s start. Bismilla.

A Pakistani Ecommerce business that has a revenue of 1 crore a year

You are earning 1 crore a year. That’s 10,000,000 rupees every year.

Revenue:

Annual Revenue [Top line]: PKR 10,000,000

Cost of Good Sold (COGS)

This is what the product costs you.

If you are selling something for 5,000 rupees, and it costs you 3,000 rupees to get, the COGS is 3,000 rupees.

Typical COGS for e-commerce store in Pakistan hovers around 40 to 60%.

Let us assume 50%. This means that what you’re selling for 5,000, it costs you 2,500.

Gross Profit

This term, Gross Profit, simply means what you make after subtracting the COGS from the Revenue.

Your Gross Profit / Margin is 50% of 1 Crore, that’s 5 million rupees a year.

Gross Profit: 50,000,000

Operating Expenses

In my experience helping people start their businesses, I feel that many people do not pay attention to this number when they are doing calculations (and dreaming) about their business.

Operating expenses (OPEX) are the costs that you will incur, no matter if you make one sale or a hundred sales. These are usually fixed costs that you have to pay.

In our example, our monthly expenses are:

Key expense breakdown (approximate and typical):

Total OPEX: 2,580,000 annual.

We have not added your pay.

So about 2.6 million rupees every year, goes to OPEX.

Net Profit Before Tax

Net Profit Before Tax
= Gross Profit – Operating Expenses
= 5,000,000 – 2,580,000 = 2,420,000 PKR

Jee, the tax man cometh as well.

Taxes

Let us assume that you are registered and pay income tax at a small business rate. As that is slab based right now, it can be 7.5% or 15% or higher. The exact income tax rate can be calculated. But for our example, to keep it simple, we are using 10% as the income tax. That’s 10% of the profit, not revenue.

= 10% of 2,420,000 = 242,000 PKR

Net Profit (after Tax)

= 2,420,000 – 242,000 = 2,178,000 PKR

Summary of breakdown (annual)

So let us bring everything together

Note:

• As an owner, you are earning 2.178 million per year
• Net margin is about 22%

Monthly Income of the Owner (take-home)

If you take 100% as owner’s income (meaning, you’re not reinvesting into the business at all), this means you make 2.178 Million a year.

This means you make 181,500 every month.

A business owner who “makes” 1 crore a year, makes 181,500 in real terms every month.

I don’t know about you, but that’s not the “crore-pati” I had in mind. Don’t get me wrong, earning 2 lacs a month in Pakistan, is a fairly decent income, but it is not at all what we’d call a upper income bracket, right?

Grass is Greener

Grass is usually greener on the other side. A lot of people are very content and happy earning 150,000 as an employee instead of earning 200,000 as a business owner.

But that’s not why we do business.

The upside is tremendous of course. The same business can make changes and have more sales. A lot more.

The employees (that you were paying 85,000 every month) will still get that amount. You as a business owner will be rewarded for the risk you’re taking. That’s how it works.

But doing a physical-product based e-commerce store in Pakistan, that’s good – but there is a better option I think.

A Better Option

There are 6 business models one can choose from, when it comes to starting a business, especially in Pakistan.

We have discussed the 6 business models one can choose in detail.

>You can do this quick activity (worksheet included) to find your best business model, click here to access this free resource.

Selling physical products, in this e-commerce business example, is just ONE of those 6 business models.

That’s why selling services (your skill is for sale), and selling digital products (code, apps, online courses, ebooks etc) are my top two favorite business models to explore, especially for people just starting out on this journey.

Why?

Because in these two businesses, we just add the COGS back into our Net profits.

These 2 Businesses Have Very High Profit Margins

In our example above, the COGS were at 50%.

• For services business the COGS are a lot less (around 10% is usually a safe assumption).
• For digital businesses, the COGS are essentially zero (very close to it).

For digital businesses, a gross margin of 97 percent or higher is normal.

For services businesses, we can safely assume a 10% COGS (for stuff like platform fees, digital delivery costs, even a virtual assistant helping you with the odd task, a subscription to an LLM model perhaps).

So if you were earning 1 Crore a year with your digital business, you would be earning:

Revenue: 10,000,000 PKR

• COGS (assume 10%): 1,000,000 PKR (platform fees, digital delivery costs, maybe 1 VA helping with fulfillment)
• Gross Profit: 9,000,000 PKR
• Operating Expenses (same as before): 2,580,000 PKR
  • 85,000 * 2 staff * 12 months = 2,040,000
  • Other expenses = 540,000 (all these are over a year)

Net Profit Before Tax

• Gross Profit – Operating Expenses
  = 9,000,000 – 2,580,000
  = 6,420,000 PKR

You’re looking at 6.42 million PKR annually, or 535,000 PKR/month before tax.

Assuming a 10% effective tax rate, your net profit after tax is around 5,778,000 PKR/year

Or about 481,500 PKR/month after tax.

The Point

Same revenue can lead to wildly different profits.

This is exactly why digital products scale so well. Any extra rupee earned barely adds costs.

That is what the goras call “leverage” that comes from digital products (or even services in our example, with a 10% COGS thrown in for good measure).

If you are interested in starting your own online business, based around selling digital products like online courses, or a services business, I have been doing this, and teaching this, for a long time now.

I don’t promise you’ll be earning 1 crore every year on year one, but there are students in our community who are earning a lot more than that, and students who are not earning as much.

The idea is simple: get to 200,000 per month in revenue as quickly as possible. And because we try to select a services business or a digital products business (like online courses, teaching etc), our profit margins on 200,000 revenue remain fairly decent.

Click here to apply for a discovery session with me to discuss your next move! (the discovery session requires you fill an application – takes a few minutes – but the live online session with me itself is free of cost). You will be able to schedule the call and book my time on my calendar right after the application submission.

I look forward to your success.