Profit margin calculator for Shopify stores

How to use the profit margin calculator

1. Enter your selling price and what one unit costs you, including shipping to the customer.
2. Add your payment fee (Shopify Payments and most card processors charge around 3%, check your plan).
3. Enter your average ad cost per order (ad spend divided by orders).
4. Add other costs per order (packaging, apps, returns) and your monthly overhead.

Gross margin vs net margin

Gross margin is what's left of the price after product, shipping, fees and other per-order costs, before ads. Net margin is what's left after ads too. Gross margin tells you if the product can work; net margin tells you if your marketing does.

Formula: profit per order = price − product cost − shipping − payment fee − ad cost − other costs. Net margin = profit per order ÷ price.

What's a good profit margin for a Shopify store?

It depends on your price and how you get customers. Stores that buy most of their traffic with ads need a high gross margin, because ads take a big share of every sale. If your gross margin is thin, raise the price, add a bundle or quantity break, or lower product and shipping costs before you spend more on ads.

Next: how to raise average order value and the break-even ROAS calculator.

FAQ

Is profit margin the same as markup?
No. Markup is profit divided by cost; margin is profit divided by price. A product that costs $10 and sells for $20 has a 100% markup and a 50% margin.

Should I include ad costs?
For a true picture, yes. That's the difference between gross and net margin in this calculator.