---
title: "Last month's profit well below the average: pricing on a better past"
url: https://firstpassmemo.com/flags/last-month-profit-below-average/
updated: 2026-10-07
publisher: FirstPass Memo (hello@firstpassmemo.com)
---

Red flag explained · Trend

# Last month's profit well below the average: pricing on a better past

Short answer: When last month's profit is more than 20% below the average, a price set on the average overstates what the business earns now. Work out payback on last month as well as on the average, and ask whether the drop is a one-off or a trend before you make an offer.

Updated 7 October 2026 · Checker rule PROFIT_DECLINE

## When the checker raises it

Raised when last month's profit is more than 20% below the stated average monthly profit: medium severity from 20%, high severity above 35%.

## Why it matters

Sellers usually quote a 6- or 12-month average. If the business is shrinking, the average lags behind it and the price lags with it.

The difference matters. A $36,000 price on a $1,500 average is 24 months of payback. On a $1,050 last month it is about 34 months.

## A worked example

Composite example, not a real listing

Shopify store selling ergonomic desk accessories Asking price: $48,000 Average monthly revenue: $9,500 Average monthly profit: $1,600 (last 12 months) Last month profit: $1,050 Business age: 2 years Owner hours: 6 hours per week

Traffic or revenue sources typed in: Paid 55%, Organic search 15%, Direct 20%, Social 10%.

What the red-flag checker (https://firstpassmemo.com/checker/) returns: payback of 30 months on average monthly profit, and this flag:

Medium Last month's profit is 34% below the average

Last month $1,050 against an average of $1,600. A price set on the average overstates what the business earns now.

Ask: What pushed last month below the average, and is it a one-off or a trend?

The same example also raises: No connected data source mentioned (https://firstpassmemo.com/flags/no-connected-data-source/), Concentration not disclosed (https://firstpassmemo.com/flags/concentration-not-disclosed/).

## What to check

- Ask what pushed last month below the average, and whether the month before was also low.

- Ask for monthly revenue and profit for the last 12 to 24 months, not the average.

- Re-run payback on the last three months and decide which number you are willing to pay on.

## Questions to send the seller

- What pushed last month below the average, and is it a one-off or a trend?

- Can you show the same month last year, so seasonality can be separated from decline?

- Are there one-off items in the period, such as a large sale, a refund or a paused cost, that move the average?

- How have views and revenue moved over the last 6 months?

## Related flags

- Last month at or below zero (https://firstpassmemo.com/flags/last-month-profit-zero-or-negative/)

- Revenue declining (https://firstpassmemo.com/flags/revenue-declining/)

- Short averaging window (https://firstpassmemo.com/flags/earnings-averaged-over-short-period/)

- All red flags explained (https://firstpassmemo.com/flags/)

## Useful next

- Acquire.com listing red flags (https://firstpassmemo.com/guides/acquire-listing-red-flags)

- Free red-flag checker (https://firstpassmemo.com/checker/): paste a listing and see which flags it raises.

The checker is a set of plain rules, not an AI model, and its flags are prompts for questions, not verdicts. Composite examples are invented. Informational screening only, not investment, legal or tax advice.

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FirstPass Memo is informational screening, not investment, legal, tax, accounting or valuation advice, and not an audit. Seller figures are not independently verified. HTML version: https://firstpassmemo.com/flags/last-month-profit-below-average/