AdProfitTools

Find calculators and guides.

Ecommerce Profit Margin Calculator

Calculate ecommerce profit after product costs, shipping, fees, refunds, ads, and fixed costs.

Example: $60
$
Example: 500
Example: $20
$
Example: $5
$
Example: $6,000
$
Advanced assumptions Optional fees, reserves, and planning targets
Example: 3%
%
Example: 3%
%
Example: 5%
%
Example: $2,500
$
Example: 15%
%

Review the result

Net profit
--
Net profit margin
--
Contribution margin before ads
--
Ad spend per order
--
Break-even price
--
Price for target margin
--

How to use this calculator

See the margin left after advertising

A store can show a healthy gross margin and still lose money after shipping, transaction fees, refunds, and paid acquisition. This calculator keeps those layers separate so you can see where the margin disappears.

Use one reporting period

Enter sales, units, ad spend, and fixed costs from the same period. Mixing monthly ad spend with weekly sales makes the result unusable.

Break-even price and target price answer different questions

The break-even price covers the costs entered. The target price also leaves the net profit margin you selected. Both depend on the fee and refund assumptions.

Formula quick reference

  • Net sales = gross sales x (1 - refund rate)
  • Contribution profit before ads = net sales - product cost - fulfillment - platform fees - payment fees
  • Net profit = contribution profit before ads - ad spend - fixed costs
  • Net profit margin = net profit / net sales x 100
  • Break-even price = per-unit costs / (1 - refund rate - platform fee - payment fee)
  • Target price = per-unit costs / (1 - refund rate - platform fee - payment fee - target margin)

Worked example

Monthly store example

Inputs: 500 units at $60, $20 product cost, $5 fulfillment, 6% combined fees, 5% refunds, $6,000 ads, and $2,500 fixed costs

Result: $5,700 net profit and a 20% net margin

Note: The same inputs produce a $47.19 break-even price and a $56.76 price for a 15% target margin.

Common mistakes

  • Treating revenue as profit before subtracting fees, refunds, and advertising.
  • Mixing sales and costs from different reporting periods.
  • Comparing gross margin with a net profit target.

What the result means

  • Judge the result against your own category, return rate, channel mix, and fixed cost base.
  • A positive margin can still be too small to fund inventory, taxes, or growth.

Ecommerce Profit Margin Calculator FAQ

How do I calculate ecommerce profit margin?

Subtract product cost, fulfillment, platform and payment fees, refund reserves, advertising, and fixed costs from net sales. Divide the remaining profit by net sales and multiply by 100.

Should ad spend be included in ecommerce profit margin?

Yes when you want net or contribution profit after acquisition. Keep gross margin separate so you can see whether the product itself or the marketing spend is causing the problem.

What is contribution margin before ads?

It is net sales left after product, shipping, platform, payment, and refund costs, but before advertising and fixed costs.

How is break-even price calculated?

The calculator allocates per-unit costs, ad spend, and fixed costs, then divides by the share of each sale left after percentage fees and refunds.

Does this calculator include tax?

No separate tax field is included because tax treatment differs by business and market. Use sales and costs on a consistent tax basis.