Asttero

Order profitability

Ecommerce margin calculator

See what is left from an average order after sales tax, product cost, shipping, fulfillment, payment fees, returns, and other variable costs.

Basic data

Currency changes formatting only; it does not convert exchange rates.

Value after discounts, excluding shipping cost.

Enter 0 for free shipping.

If orders include products with different tax rates, enter an averaged effective rate or treat the result as an approximation.

Enter net cost if you reclaim sales tax. If you do not reclaim it, enter the amount actually paid.

Calculations run locally in your browser. Asttero never receives the amounts you enter.

How is ecommerce margin calculated?

The calculator first subtracts sales tax from gross revenue (products + customer-paid shipping), then reduces net revenue and product cost by the estimated return rate. It then subtracts store shipping, fulfillment, payment fees, the expected return-handling cost (handling cost x return rate), and other order-dependent costs. 

Net revenue after returns = ((products + shipping) / (1 + tax rate)) × (1 − return rate)

Product cost after returns = COGS × (1 − return rate)

Expected return-handling cost = return-handling cost × return rate

Margin after variable costs = net revenue after returns − all variable order costs

What do these terms mean?

Return rate
The estimated share of sale value that comes back as a return. In the calculator it reduces net revenue and product cost, and is used to calculate the expected return-handling cost.
COGS
Cost of Goods Sold: the product cost per order (purchase or manufacturing cost). It does not include shipping, packing, or payment fees.
Net revenue after returns
The value of products and customer shipping after subtracting sales tax and accounting for the return rate.
Expected return-handling cost
The full cost of handling one return multiplied by the return rate. It shows the average return cost allocated to every order, not only the returned ones.
Margin after variable costs
The amount left from an average order after every sales-dependent cost, before advertising. It is also the maximum CPA at which the order breaks even.

Example for a $300 gross order

With products at $300 gross, $10 customer-paid shipping, 23% tax, $90 product cost, $15 store shipping, $8 fulfillment, payment fees of 1.5% + $0.30, an 8% return rate, an $18 return-handling cost, and $3 in other costs, the calculator shows net revenue after returns of about $231.87 and margin after variable costs of about $116.68 (the maximum CPA).

FAQ

What is the difference between margin and markup?

Margin shows how much of net revenue is left after subtracting cost. Markup compares profit to product cost. The same sale can have a 50% margin and a 100% markup.

Should costs be entered net or gross?

If your business reclaims sales tax on a given cost, enter the net amount. If you do not reclaim it, enter the full amount you actually pay.

How do I account for returns?

Enter the estimated return rate as a percentage of sale value, plus the full cost of handling one return. The calculator reduces net revenue and product cost by the return rate, and calculates the expected return-handling cost as handling cost x return rate.

Is ad spend part of the margin?

The calculator shows margin before advertising and, optionally, the result after you enter your current CPA. That way you can see the maximum you can spend to acquire an order.

Why might the result differ from my accounting report?

The calculator is based on an averaged order and variable costs. Accounting reports may use different revenue recognition timing, fixed costs, adjustments, multiple tax rates, and individual accounting rules.

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