Free ecommerce tool

Free Shopify Profit Margin Calculator

Enter your selling price and the costs of one order to see what you really keep. Get profit per order, profit margin, markup and the break-even ROAS your ads need. It works for any ecommerce store, on Shopify or any other platform.

Live calculator

Calculate your profit per order

Selling price ($)Discount ($, optional)Product cost / COGS ($)Shipping you pay ($)Packaging ($, optional)Apps and other cost per order ($, optional)Payment fee (%)Payment fee, fixed ($)Ad cost per order ($, optional)

2.9% + $0.30 is only an example. Use the payment fee from your own plan and payment provider.

Profit margin

28.5%

You keep $14.25 from every order.

Revenue after discount: $50.00
Total costs per order: $35.75
Profit per order: $14.25
Markup on product cost: 177.8%
Break-even ROAS: 2.06x

Formulas

Margin = profit / revenue x 100

Break-even ROAS = revenue / profit before ads

How to calculate Shopify profit margin

Profit margin is the share of each sale you keep after all costs. The formula is: profit margin = (revenue - total costs) / revenue × 100. Revenue is what the customer pays for the product after any discount. Total costs are everything you pay to make that one sale happen.

Example: you sell a product for $50. It costs you $18 to make or buy, $6 to ship, and the payment fee is 2.9% + $0.30, which is $1.75. You also spend about $10 on ads for each order. Total costs are $18 + $6 + $1.75 + $10 = $35.75. Profit is $50 - $35.75 = $14.25, so your profit margin is $14.25 / $50 = 28.5%.

Costs people forget

Payment fees. A few percent plus a fixed fee on every order. On cheap products the fixed fee alone can eat a big part of the profit.
Shipping you pay. Free shipping is not free for you. Use what you pay the carrier, not what the customer sees.
Returns. If 5% of orders come back, spread the cost of those returns over all orders and add it to the app and other cost field.
Apps. Monthly app bills add up. Divide them by your monthly orders to get a cost per order.
Ad spend. Divide your ad spend by the orders it brought in. This is your cost per order from ads.

Gross margin vs net margin

Gross margin only takes away the product cost: (price - product cost) / price. For the $50 product that cost $18, gross margin is 64%. Net margin takes away every cost, including shipping, fees, apps and ads. In the example it is 28.5%. Gross margin is good for comparing products. Net margin tells you if the business makes money. If you price with a markup on cost, the markup calculator converts between markup and margin.

Break-even ROAS explained

ROAS (return on ad spend) is revenue divided by ad spend. Break-even ROAS is the ROAS where ads pay for themselves and you make $0 profit. The formula is: break-even ROAS = revenue / profit before ad cost.

In the example, profit before ads is $50 - $25.75 = $24.25, so break-even ROAS is $50 / $24.25 = 2.06x. Each $1 of ads must bring in at least $2.06 in sales, or you lose money on those orders. Check your real campaign numbers with the ROAS calculator.

How to raise your margin

You can cut costs, but the bigger levers are often price and order size. Raise your average order value with bundles, a free shipping threshold or add-ons, so fixed costs like shipping and fees are spread over more revenue. Test a higher price on part of your traffic before you change it for everyone. A small price rise often goes straight to profit.

Do not guess which version wins. Run an A/B test on the price or product page, and see what a win is worth with the A/B testing ROI calculator.

FAQ

What is a good profit margin for a Shopify store?

It depends on the product and how you get customers. Many stores aim for a net margin of 10% to 20% per order after product cost, shipping, fees and ads. If your margin before ads is thin, paid ads will be hard to make profitable.

Should I include ad spend in my profit margin?

Yes, if you pay for ads to get orders. Without ad cost you see your margin before marketing, which is useful for pricing. With ad cost you see what you really keep. This calculator shows both: profit per order with ads, and break-even ROAS based on profit before ads.

What is the difference between margin and markup?

Margin is profit as a share of the selling price. Markup is how much you add on top of product cost, as a share of that cost. A $50 item that costs $18 has a markup of 177.8% on product cost, but after shipping, fees and ads its margin may be under 30%.

Are the payment fees in the calculator Shopify's real rates?

No. 2.9% + $0.30 is only an example. Payment fees depend on your plan, your payment provider, the card type and the country. Check your own payment settings and enter your real rate.

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