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We have some items that are free shipping. Obviously, there is a shipping cost. How do we account for this in Magento or some other solution so that we can keep track of profit/loss per order?

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You cannot from within Magento, you can set cost for a product but not the cost for shipping.

A work around would be to add the rule to the product and leave the shipping amount intact. This way you can see cost vs price.

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