Shopify profit margin calculator

The gross margin in your Shopify admin looks healthy. The ROAS in Meta Ads Manager looks fine. Then the month closes, and what's left is far smaller than either number led you to expect.

Both reports are right as far as they go.

Gross margin stops at the cost of the product and ROAS stops at the cost of the ads. The parcel and the payment fee sit in neither report, the orders that come back only in Shopify's, and in the example below the three take almost as much out of the order as the ads do.

This Shopify profit margin calculator answers the question underneath both: how much profit does each order actually make? In the worked example, a bag sells for €85 including German VAT and the store makes €16.41. The other €68.59 goes to VAT, refunds, the product, shipping and fulfillment, payment fees and ads. The Profit margin tab gives you that figure for the price you charge today, and the Target price tab works backwards from the margin you want to the price you'd need.

Find each number before you type it

Take every figure from the same month.

Product cost from last quarter, a return rate from a quiet month and ad spend from a busy one add up to a margin the store never had, and with each number living in a different tool the mismatch is easy to miss.

Follow €85 from checkout to your profit

The example is illustrative: a bag at €85 incl. 19% German VAT, a product cost of €24, €7.50 for shipping and fulfillment, Shopify Payments on the Grow plan at 1.8% + €0.30, a 12% return rate and €16 of ads per order.

Read it the way you'd check a supplier invoice, top line first.

Every percentage on this page is a share of net sales: the price after refunds and VAT (€62.86 here). A 20% margin means 20% of that figure.

Refunds come off first, because money that went back to the customer was never revenue. VAT is then worked out on the sales that stay, which is why the VAT line is smaller than the tax on a single €85 invoice.

Product cost counts only on the 88% of orders customers keep, since a returned bag goes back on the shelf. The payment fee counts on every order and on the full €85 with VAT. We charge it that way because the provider takes its percentage from what the card is charged, and Shopify Payments doesn't return the original fee when you refund.

Each subtotal answers its own question. Gross profit of €41.74 is what the product earns at its price. The €32.41 after shipping and fees is what's left to pay for ads, and the €16.41 at the bottom is the order's profit before salaries, rent and software.

Gross margin, markup and the point where Shopify stops

Price against product cost alone gives a gross margin of 66.4% (a net price of €71.43 against €24) and a markup of 197.6%.

Both numbers are correct, and both describe the bag before anyone has packed it, shipped it or paid to sell it.

Shopify's profit reports work the same way: gross profit there is net sales minus the cost per item you enter, and because ad spend, payment fees and return costs aren't part of that cost, the report ends at the €41.74 line on the receipt, with three deductions still to come below it.

Take VAT out before you calculate anything

Shopify's own reports already handle this part, since net sales there exclude tax. The trouble starts in the spreadsheet, the ROAS math and anything else built on the price the customer pays, which in the EU includes VAT. Enter €85 as if it were the price before VAT and every line below it inflates.

The order appears to make €28.35. It makes €16.41, and the gap is exactly the VAT line of €11.94, because product cost, shipping and the fee don't change.

Take VAT out before you set a spreadsheet margin next to the one in Shopify's reports. A margin worked out on a mix of VAT-inclusive and VAT-exclusive prices invents differences that aren't there.

The payment fee is the one cost that still sees VAT. It's charged on the full €85.

How returns cut your profit

Three return costs sit outside the model: return labels, return handling by your 3PL, and items that can't be sold again at full price. If they show up as real lines on the 3PL invoice or in the stock count, add their monthly total divided by orders to shipping and fulfillment, and every order carries its share.

Everything else follows a simple model: a returned order is refunded in full and the item goes back into stock.

At 12%, returns cost €5.69 per order. The calculator refunds €8.57 of sales after VAT and puts €2.88 of product back on the shelf, and the difference is the margin that leaves with each refund.

Shipping, the payment fee and the ads on a returned order were paid when it went out, and they sit in their own lines on the receipt, which is why the €5.69 doesn't include them. Nor does the carrier hand back the cost of a label because the parcel came home.

Gross margin reads 66.4% at every rate in the table, since a refund removes the sale and, with the bag back in stock, the matching product cost in the same proportion. What falls is the profit margin at the bottom, because shipping, the fee and the ads now sit on fewer sales.

Shipping and fees stay the same at any price

VAT, refunds and most of the payment fee scale with the price. The parcel and the €0.30 don't, and a label costs what it costs whether the product inside sells for €85 or for half that.

Add €1 to shipping and fulfillment and the bag makes €15.41 instead of €16.41. A one-euro change on a 3PL rate card takes 6.1% off the order's profit.

The payment method moves the number too. On the Grow plan, with the calculator's presets for Germany (checked 5 Oct 2026):

The plan picker covers Basic, Grow, Advanced and Plus, and the fees update with it. On Plus, Shopify Payments drops to 1.3% + €0.30, or €1.41 on the €85 bag, which then makes €16.83, and Shopify's fee for other providers falls to 0.2%.

Your real rate is a blend of whatever customers choose at checkout. If a large share of orders go through PayPal or Klarna, the Shopify Payments preset will understate your fees by more than a few cents an order, and both fee fields stay editable for that reason.

A cheaper product with the same margin loses money

Now take a €45 product with the same 66.4% gross margin and give it the same shipping, fee and €16 CPA.

Same gross margin, and one of them loses money on every order.

Shipping, the €0.30 and the CPA are the same euros on both products, and on €45 they take a much bigger share. Judge a low-priced product by what's left after shipping and fees, because gross margin alone rates the two as equally good.

Ads take the biggest share of what's left

In the calculator, CPA means total ad spend across all channels divided by all orders in the same period. Meta Ads Manager shows a different CPA, because platform attribution counts orders its own way and usually counts more of them.

The €32.41 left after shipping and fees is the most the bag can spend on ads before it loses money. Divide the €85 price by it and you get a break-even ROAS of 2.62.

That 2.62 is blended: price over ad spend per order, counted across all orders. Hold it against your total revenue incl. VAT divided by your total ad spend across every channel for the same month. The ROAS that Meta or Google reports for itself is a different figure, since each platform counts the orders it attributes to its own ads. Two checks before comparing: the revenue should include VAT, and it should count orders before refunds, as the 2.62 does.

We'd judge ad spend against the €32.41 line rather than against gross margin. Gross margin leaves the parcel and the payment fee still to pay, and those come out of every order whether the ads worked or not.

At €16, ads take 49% of the €32.41, the largest single cost after the product. How far the CPA can go:

The €19.84 is the €32.41 minus 20% of the €62.86 in net sales, and since the two tiles in the calculator show only the break-even point, the way to find the CPA for a target margin is to raise the CPA field until the margin line reads 20%.

When we set up Admetrics for a store, we start from this blended CPA and then split it by channel and campaign using the store's own orders, because a blended figure can sit comfortably under €19.84 while individual campaigns sit far above it.

Work out the price for the margin you want

The Target price tab takes the same costs and a margin you pick (chips for 10, 20, 30 and 40%) and returns the lowest price that keeps it.

At 30%, the bag would sell for €89.90, or €75.55 before VAT, and make €19.94 per order, a 30.0% profit margin. At that price the most it can spend on ads rises to €35.94 and break-even ROAS falls to 2.50. The 10% and 20% prices come out below €85 because the bag already makes 26.1% at €85.

When costs are too high for the margin you ask for, the tab tells you the margin can't be reached instead of giving you a price.

What is a good profit margin?

One that pays your fixed costs and leaves profit, which only your own numbers can tell you. Team, rent, software and agency retainers never appear on the receipt, and all of them get paid out of order profit.

The €10 is an average, and it isn't a hurdle every order has to clear. A product that makes less still helps pay fixed costs if its orders are extra sales rather than ones taken from better products.

The verdict bands (Losing money below 0, Thin margin up to 10%, Healthy up to 20%, Strong above that) are a reading aid. They say nothing about your category, and the bag reads Strong at 26.1% whether or not its orders cover your fixed costs.

What this calculator can't tell you

It works with one product, one payment method and one blended CPA, and real stores have none of those.

Customers buy baskets, and two items in one parcel share a single label and a single fixed fee. Checkout mixes cards, Klarna and PayPal. Campaigns buy orders at very different costs, while the calculator sees only the average. Returns follow the simple model above, without labels, handling or stock you can't resell at full price, and chargebacks (a customer disputing a payment with their bank) aren't modeled at all. If the question is what a promotion does to your margin, the discount profit calculator is built for that.

Admetrics calculates profit margin per product, campaign and channel from your real orders, returns and costs, and shows which of them pull the average down.