Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A sale that looks profitable on the product margin alone can lose money once platform fees, payment processing and fulfillment all get subtracted in sequence, each taking its own bite before the next one applies. Advertising cost is often the last piece added and the one most likely to flip a marginally profitable order into a loss.
Before you rely on it
What to check
Add every cost layer in the actual order they apply, cost of goods, platform fee, payment processing, fulfillment, then advertising, rather than lumping them into one rough deduction.
The common error
Where people go wrong with ecommerce profit calculator
Judging profitability from the product margin before fees and shipping. On a low-ticket item, combined platform and fulfillment costs can consume a larger share of revenue than the product itself cost to make.
Sensitivity evidence
How order revenue changes the estimated net profit
| Order revenue | Estimated net profit | Net margin |
|---|---|---|
| $80,000 | $11,000 | 13.8% |
| $90,000 | $20,500 | 22.8% |
| $100,000worked example | $30,000 | 30.0% |
| $110,000 | $39,500 | 35.9% |
| $120,000 | $49,000 | 40.8% |
Every input, tested
Which input moves the estimated net profit most
| Input | Tested from | To | Estimated net profit at each end | Swing |
|---|---|---|---|---|
| Order revenue | $90,000 | $110,000 | $20,500 to $39,500 | $19,000 (63%) |
| Product cost | $31,500 | $38,500 | $33,500 to $26,500 | $7,000 (23%) |
| Advertising spend | $16,200 | $19,800 | $31,800 to $28,200 | $3,600 (12%) |
| Fulfillment and shipping | $10,800 | $13,200 | $31,200 to $28,800 | $2,400 (8.0%) |
| Platform and processing fees | 4.0% | 6.0% | $31,000 to $29,000 | $2,000 (6.7%) |
Two variables at once
Estimated net profit by order revenue and product cost
| Order revenue \ Product cost | $28,000 | $35,000 | $42,000 |
|---|---|---|---|
| $80,000 | $18,000 | $11,000 | $4,000 |
| $90,000 | $27,500 | $20,500 | $13,500 |
| $100,000 | $37,000 | $30,000 | $23,000 |
| $110,000 | $46,500 | $39,500 | $32,500 |
| $120,000 | $56,000 | $49,000 | $42,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Order revenue | $100,000 |
| Product cost | $35,000 |
| Fulfillment and shipping | $12,000 |
| Platform and processing fees | 5.0% |
| Advertising spend | $18,000 |
| Estimated net profit | $30,000 |
| Net margin | 30.0% |
Where the inputs come from
Order revenue is sales net of refunds. Product cost is what you paid for the goods sold, fulfillment and shipping covers picking, packing, postage and returns handling, and platform and processing fees are the marketplace and payment charges as a percent of revenue. Advertising spend is the total for the period. Include returns and chargebacks in revenue, since ignoring them overstates profit, and add software and staff if you want a fuller figure.
When the result stops applying
The model does not include overhead such as software, salaries, rent or taxes, so net profit is before those. Advertising attribution is imperfect, and returns can be higher than expected in some categories such as apparel. Costs vary by order size and destination, so an average can hide unprofitable orders. Currency and customs add costs for international sales.
What to compare it with
Check the return on ad spend with the ROAS calculator, and the conversion rate calculator for the funnel. The payment processing fee page isolates card costs, and the break-even and contribution margin pages show volume needs. The inventory carrying cost calculator adds the cost of stock you hold.
People also ask
Frequently asked questions
What is a healthy ecommerce net margin?
Many stores aim for 10% to 20% after all costs, but it varies with the product and advertising dependence. Margins below 5% leave little room for error.
What costs do sellers most often forget?
Returns and refunds, payment fees on refunded orders, chargebacks, packaging, storage fees, customer service and the cost of unsold inventory.
How can I improve profit?
Raise average order value, cut product and shipping costs, lower advertising cost per order, reduce returns and focus on products with the highest contribution.