The Ecommerce Profit Calculator: What Do You Keep From Each Order?

A useful profit calculator starts with consistent inputs and labels its result honestly. Per-order contribution is not the same as final business profit. It shows what remains from an order after the costs included in the model, before any excluded overhead and taxes.

Use this guide with the calculator formulas in the companion implementation files. The formulas are also easy to reproduce in a spreadsheet.

Define the revenue basis

For this model, use net merchandise revenue after discounts and expected merchandise refunds, excluding sales tax and shipping collected. Handle shipping collected by subtracting it from shipping cost to obtain the net shipping subsidy. If your store charges more for shipping than it costs, that subsidy may be negative.

Do not subtract a refund twice. If you instead begin with revenue before expected refunds, deduct those refunds once as a separate expected loss and label the model accordingly. Keep product-cost recovery and return-processing costs consistent with that choice.

Enter the variable costs

Include landed product cost under your accounting definition, fulfillment and packaging not already included, net shipping subsidy, payment fees, variable marketplace or creator fees, and other variable costs not already counted.

Use actual dollar fees where possible. Payment processing may be charged on a broader total than the merchandise revenue in this model, so a percentage of AOV can be an inaccurate shortcut.

Expected return handling or variable support costs can be included as an allowance when supported by evidence. Label estimates and test a higher-cost scenario.

Calculate contribution

Let R be net merchandise revenue, V be all included variable costs before acquisition, and A be the allocated acquisition cost for the order.

• Contribution before acquisition: C = R − V
• Contribution margin before acquisition: C / R, when R is positive
• Contribution after acquisition: C − A
• Break-even ROAS before fixed overhead: R / C, when C is positive

If C is zero or negative, the product does not support positive acquisition spending under these assumptions. Show “not achievable with current unit economics” rather than dividing by zero.

Work through the example

For a hypothetical $60 order, assume $24 product cost, $8 combined fulfillment and net shipping subsidy, $2 payment fees, and $4 other expected variable costs. Total pre-acquisition variable costs are $38, so contribution is $22 and contribution margin is approximately 36.7%.

At $15 acquisition cost, contribution after acquisition is $7. Break-even ROAS before fixed overhead is approximately 2.73×. This model assumes revenue and advertising cost refer to the same scope of orders; an ad platform's differently attributed ROAS may not match it.

Set an allowable acquisition cost

If you want $6 per order for fixed-overhead allocation and $4 for desired profit, the allowable acquisition amount is:

Allowable acquisition = C − overhead allocation − desired profit

In this example it is $12. The corresponding modeled revenue-to-acquisition ratio is 5×. If the allowance is zero or negative, show that the target cannot support paid acquisition under the entered assumptions.

Do not confuse this per-order advertising allowance with fully loaded new-customer CAC. Returning-customer orders, creative costs, and future customer contribution require separate treatment.

Use scenarios before scaling

Change price, discounts, return costs, shipping, and acquisition cost one at a time. Identify which assumptions most affect the result. Then verify those inputs against real orders.

For a monthly view, multiply representative contribution after acquisition by expected orders and subtract fixed costs once. Avoid subtracting an allocated overhead amount per order and then subtracting the same overhead again.

Start with your three most important products and compare actual results with the model. The calculator is a decision aid: it helps you see what an order can afford and which cost or pricing assumption needs attention.