Shopify profit margin calculator — contribution margin per order
Shopify sellers often quote gross margin (sale minus COGS). Investors and ad platforms care about contribution margin — what's left after variable costs on each order before fixed overhead.
Margin formula (per order)
Contribution margin = Sale price − COGS − Outbound shipping − Payment processing − Ad spend per unit
Margin % = Contribution margin ÷ Sale price × 100
Shopify subscription, apps, and payroll are fixed — don't mix them into per-unit margin unless you're doing full P&L.
Example: $48 skincare serum
$48 sale · $14 COGS · $4.50 ship · ~$1.70 processing (2.9%+$0.30) · $6 Meta CPA → contribution margin ≈ $21.80 (45%), not the 71% gross margin COGS alone suggests.
At 200 orders/month that's $4,360 contribution to cover ads scale, returns, and overhead — not $14,000 naive gross.
When margin % matters most
- Scaling paid ads — if contribution margin is under 30%, raising budget often shrinks profit
- Free shipping promos — shipping you absorb hits margin % directly
- Bundle pricing — run each SKU variant; blended AOV hides losers
When to upgrade from a calculator
At 300+ orders/month, connected tools like TrueProfit ($35+/mo) sync Shopify orders and ad spend automatically. Until then, fast what-if margin math is enough.
Open Shopify margin calculator →