Shopify Profit Margin Calculator

What your result means

The calculator shows your profit and margin after the main costs of running a Shopify store: product costs, shipping, payment fees, ad spend and any other monthly costs you enter.

It's before tax and interest, so it isn't the final bottom line, but it's the number that shows whether the store's day-to-day economics work. It also points to the cost line taking the biggest bite, so you know where to look first.

How the profit margin formula works

Payment fees = Revenue × Fee rate Profit (before tax & interest) = Revenue − COGS − Shipping − Payment fees − Ad spend − Other costs Margin = Profit ÷ Revenue × 100

Revenue

monthly revenue

COGS

cost of the goods sold that month

Other costs

apps, software, staff and other overheads

Subtracting only COGS from revenue gives gross margin. Subtracting interest and taxes as well gives true net margin. The guides to gross profit margin and what a good profit margin is cover the difference.

Worked example

Worked exampleExample numbers

These match the calculator's default inputs.

Input	Value
Monthly revenue	$20,000
COGS	$6,000
Shipping cost	$1,200
Payment fee rate	2.9%
Ad spend	$3,000
Other costs	$800

1. Payment fees = $20,000 × 2.9% = $580
2. Profit = $20,000 − $6,000 − $1,200 − $580 − $3,000 − $800 = $8,420
3. Margin = $8,420 ÷ $20,000 = 42.1%

Gross margin on the same numbers is ($20,000 − $6,000) ÷ $20,000 = 70%. The other costs take 27.9 points of it.

How to improve your profit margin

• If ads are the biggest cost, check whether they're profitable after margin with the Ad Profit Leak Score.
• If product costs are the biggest cost, look at your lowest-margin SKUs with the contribution margin calculator and fix pricing or supplier costs there first.
• Cut shipping per order with a free shipping threshold, better carrier rates or lighter packaging.
• Audit apps and subscriptions. Small monthly fees add up, and they hit profit directly.
• Raise average order value, so fixed costs per order fall.

Common mistakes

• Using sales before refunds. Enter revenue after discounts and returns, or the margin will look better than it is.
• Using supplier price as COGS. Include inbound freight, duties and packaging; that's what the products really cost.
• Forgetting app subscriptions and tools. They're easy to overlook but can add up to a noticeable share of revenue for smaller stores. Put them in other costs.
• Mixing time periods. Ad invoices and shipping bills don't always land in the month the sales happened. Match costs to the month of the sales.
• Comparing with a gross margin figure. Shopify's profit reports and many dashboards show gross margin, which only subtracts product costs. This calculator subtracts much more, so its number will be lower.