Profit margin calculator
Cost of goods, shipping, payment fees and discounts all come out before the number means anything. Add lifetime orders and per-order profit becomes the LTV you can spend against.
Per order, or for a whole period. Keep every field on the same basis.
What the products in that order cost you landed.
Pick, pack and postage you pay, net of anything the customer covers.
Gateway plus platform percentage. 2.9% is the common Shopify Payments card rate.
Codes, sitewide sales and automatic discounts, averaged.
Turns per-order profit into profit LTV.
Enter revenue and cost of goods to see what survives.
By the Numbers applies cost data across products, orders and cohorts so margin shows up next to revenue everywhere. See the product reports
Reading the cost stack
The breakdown on the right is usually more useful than the headline percentage. Discounts are the line stores underestimate most. A twelve percent average discount is not twelve percent off margin. It is twelve percent of revenue removed before any cost is paid. At a forty percent margin, that is nearly a third of the profit on that order.
One blended margin also hides the products quietly losing money. Margin varies enormously by SKU once shipping weight and return rates are included, and the average tells you nothing about the tail. Our SKU-level profitability tracking guide covers the version of this calculation that changes decisions.
Two numbers follow directly from your margin. Breakeven ROAS, which you can test a real campaign against in the ROAS calculator, and profit LTV, which sets the ceiling on acquisition cost in the LTV to CAC calculator. Margin is not a reporting metric. It is the input to every spending decision you make.
Margin questions, answered
How do you calculate true gross margin?
Start from revenue, take off discounts to get net revenue, then subtract cost of goods, shipping and fulfillment, and payment fees. What remains divided by net revenue is your true gross margin. The common mistake is stopping after cost of goods, which overstates margin by five to ten points for most stores.
Should shipping costs come out of gross margin?
If you pay them, yes. Fulfillment is a cost of delivering the order and leaving it out makes every downstream number optimistic, including what you think you can afford to spend on ads. Count what you pay net of anything the customer covers at checkout.
What margin does a Shopify store need?
Enough to cover acquisition and still leave contribution. Rather than chase a universal target, convert your margin into breakeven ROAS (100 divided by margin percent) and check whether your actual ad returns clear it. A 30 percent margin needs 3.3x just to stand still.
How does margin connect to lifetime value?
LTV in revenue terms is not spendable. Multiply per-order gross profit by how many orders a customer places over their lifetime and you get profit LTV, which is the real ceiling on acquisition cost. Enter lifetime orders here and the calculator shows it.
Margin belongs next to revenue, not in a separate spreadsheet.
By the Numbers applies your cost data across products, orders and cohorts, so every report shows what you kept rather than what you billed.
60-second install · 14-day free trial · No credit card required