What does your Shopify store keep from a sale?
Price, product cost, shipping, and what the ads cost for that order. You get the profit on the sale and the margin before and after ads.
- Profit on the saleWhat is left after everything
- Gross marginBefore shipping and ads
- Net marginAfter shipping and ads
Why Shopify merchants watch net margin, not gross
A product with a 70% margin on paper can lose money once shipping and the ad cost for that order are counted. The Shopify profit margin calculator shows both numbers — the gross margin before shipping and ads, and the net margin after — so you know what a sale actually keeps and how much room you have for discounts, free shipping, or a price match.
Matching a competitor’s price you found with the product exporter? Enter it here with your own costs first. If the net margin is thin, the ROAS calculator will show how efficient the ads need to be, and the lifetime value calculator will show whether repeat orders make up for it.
Shopify profit margin is what a sale keeps, and gross margin is the wrong number to scale on. A product can show 70% before shipping and ads and lose money after both. This calculator takes selling price, product cost, the shipping and fees you absorb, and the ad cost for that sale, then shows profit, gross margin, and net margin.
Match a competitor’s price only after this step. Export their catalog with the product exporter, put their price in with your costs, and see if net margin survives. If it does not, compete on the bundle, the guarantee, or the shipping threshold — the average order value lesson covers those — instead of racing the price down.
How to use the profit margin calculator
- Enter the price a customer pays and your product cost.
- Enter the shipping and fees you absorb on one order.
- Enter the ad cost for one sale, from your ad account or an estimate.
- Read profit on the sale, gross margin and net margin.
For a worked example and the common mistakes, read Shopify profit margin: gross vs net and what a sale keeps.
Margin questions Shopify merchants ask
Gross versus net, what to include, and what a healthy margin looks like.
Which margin should I watch on Shopify?
The one after shipping and ads. That is what the Shopify order actually keeps. Gross margin is useful for comparing products; net margin tells you whether the business works.
What is a good profit margin for a Shopify store?
Enough net margin to cover apps, returns, and your time after ads. Many DTC and dropshipping stores aim for a gross margin of 60–70% so that net margin stays positive after a realistic ad cost per order.
How do I know the ad cost for one sale?
Divide ad spend by the number of orders it produced over the same period — Ads Manager calls it cost per purchase. If you don’t have it yet, estimate it with the profit calculator.
Should I include shipping if the customer pays it?
Only the part you absorb. If you charge $5 and it costs you $8, put $3 in shipping and fees. Add payment processing and packaging there too.
Can I match a competitor’s lower price?
Run their price through this calculator with your costs. If net margin stays positive with room for returns, you can. If not, compete on the offer — bundles, shipping, guarantees — rather than the price.
How do I calculate profit margin on a Shopify order?
Subtract product cost, the shipping and fees you pay, and the ad cost for that order from the selling price. Divide the remainder by the price. That is the net margin the sale keeps.
What is the difference between gross and net margin on Shopify?
Gross margin is price minus product cost, before shipping and ads. Net margin is after both. Gross is how you compare products. Net is whether the order made money.
What margin should a Shopify dropshipping product have?
Enough net margin to cover returns, apps, and your time after a realistic cost per purchase. Many merchants want a wide gross margin so net margin stays positive once ads are included. Your costs set the real line.
How do I get the ad cost for one Shopify sale?
Divide ad spend by orders from that spend. Ads Manager calls it cost per purchase. If you do not have it yet, estimate it in the profit calculator from CPM, CTR, and conversion rate.
Should refunds be in the margin?
Add a realistic refund cost into shipping and fees, or lower the price you expect to keep. Ignoring returns makes net margin look healthier than the payout.