A Store Is Not a Marketplace, but Costs Still Add Up
When you sell on your own store you keep the whole customer relationship and pay no commission on each sale. That makes it easy to assume the margin is simply price minus cost. In practice three things sit between your revenue and your profit, and the third one is usually the largest:
- The monthly plan, a fixed cost that you spread across your orders.
- Card processing, a percentage of each order plus a fixed amount.
- Advertising, what you spend to bring in each customer.
Plan prices and card rates depend on the plan, the country and how you pay, and they change, so check the current figures for your store. Everything below uses example numbers to show the logic.
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The Example Order
| Item | Amount |
|---|---|
| Product price | $40.00 |
| Shipping the customer pays | $6.00 |
| Order total | $46.00 |
| Cost of the product | −$12.00 |
| Postage you pay | −$7.00 |
| Card processing (example 2.9% + $0.30) | −$1.63 |
| Share of a $25 monthly plan at 100 orders | −$0.25 |
| Ads per order (example) | −$5.00 |
| Profit per order | $20.12 |
| Margin on the order total | 43.7% |
Swipe sideways to see all columns.
Fixed Cost Spread: Why Volume Matters
The monthly plan is the same whether you ship 10 orders or 500, so each order carries a share of it. With the same $25 plan:
| Orders per Month | Plan Cost per Order | Profit per Order | Margin | Profit for the Month |
|---|---|---|---|---|
| 10 | $2.50 | $17.87 | 38.8% | $178.70 |
| 25 | $1.00 | $19.37 | 42.1% | $484.25 |
| 50 | $0.50 | $19.87 | 43.2% | $993.50 |
| 100 | $0.25 | $20.12 | 43.7% | $2,011.60 |
| 500 | $0.05 | $20.32 | 44.2% | $10,160.00 |
At a small plan price the effect on profit per order is modest, about $2.50 at 10 orders and a few cents at 500. A bigger plan changes it: with a $399 monthly plan at 100 orders, the plan costs $3.99 an order, the profit falls to $16.38 per order and $1,637.60 for the month. Only upgrade when the extra features and the lower fees are worth more than the extra fixed cost at your order volume.
How Many Orders Cover the Plan?
After the $5 of ads, each order in the example contributes $20.37 toward the plan. That means the plan is covered quickly:
| Monthly Plan (Example) | Orders Needed to Cover It |
|---|---|
| $25 | 2 |
| $65 | 4 |
| $399 | 20 |
The plan is rarely what sinks a store. The thing that does is the next section.
Advertising Is the Make-or-Break Number
Your ad cost per order is your ad spend divided by the orders it produced, also called the cost of acquiring a customer. Here is the same order at 100 orders a month with a $25 plan:
| Ad Cost per Order | Profit per Order | Margin | Profit for 100 Orders |
|---|---|---|---|
| $0 (organic) | $25.12 | 54.6% | $2,512 |
| $5 | $20.12 | 43.7% | $2,012 |
| $10 | $15.12 | 32.9% | $1,512 |
| $15 | $10.12 | 22.0% | $1,012 |
| $20 | $5.12 | 11.1% | $512 |
Every extra $5 of ad cost per order removes $500 from the month at this volume, and at $20 an order, four fifths of the profit is gone. When advertising costs more than the contribution per order, each sale loses money. Learn how to measure it in our guide on ROAS vs. ROI.
Costs That Do Not Appear in a Simple Calculation
- Apps, themes and tools: monthly subscriptions that add up, which belong to your fixed costs.
- Refunds and returns: you may lose the product, the postage and the processing fee.
- Discount codes: each one comes out of the margin; see how a discount affects profit in our guide on profit margin vs. markup.
- Chargebacks and fraud.
- Sales tax: it is collected from the customer and sent to the state, so it is not revenue, but it needs time and sometimes software to manage.
- Your own time and any help you hire.
- Income tax and self-employment tax on the profit, see our guide on what to set aside.
Five Steps to Check Your Store's Profit
- Calculate the contribution per order before ads: price + shipping charged − product cost − postage − processing fees.
- Add the plan share (plan ÷ orders per month) and other monthly tools.
- Subtract your ad cost per order.
- Multiply by the number of orders to see the monthly profit, and then subtract your own pay and taxes.
- Find your break-even: the number of orders where the monthly profit reaches zero. Read our break-even guide for the method.
If the profit per order is low, the fixes are the same as in any business: raise the price, lower the product and shipping costs, improve the conversion rate so ads buy more orders, or raise the order value with bundles.
Frequently Asked Questions
How do I calculate profit per order for my store?
Add the product price and the shipping the customer pays, then subtract the product cost, the postage you pay, the card processing fee, the share of the monthly plan and the ad cost per order.
Does the monthly plan matter?
It is a fixed cost, so it matters most at low volume. Compare the plan cost with the contribution per order to see how many orders cover it.
What is a good ad cost per order?
It depends on your contribution per order. Your ad cost should be well below it, or the order loses money. Calculate your break-even ROAS to find the limit.
Do payment fees depend on the plan?
Rates often differ between plans and between online and in-person payments. Check your current rates and enter them in the calculator.
Should I use a marketplace or my own store?
A marketplace brings customers but takes commissions; your own store keeps the margin but you pay to bring in traffic. Compare the profit per order in each, including ads.
Conclusion & Recommended Next Steps
A store makes money when the contribution of each order, after processing and the ad cost of winning it, is large enough to cover the plan and your own pay. Work out the profit per order, test what happens when ads cost more or volume falls, and aim to improve the weakest number first. Enter your own figures in the calculator and compare scenarios.
Shopify Profit Calculator
Find your profit per order after the plan, card fees and ads.
ROAS Calculator
Check whether your ads pay for themselves.
Break-Even Calculator
See how many orders cover your fixed costs.
Profit Margin Calculator
Price your products from a target margin.
Disclaimer: This guide is intended solely for educational and informational purposes and does not constitute personalized financial, legal, or tax advice. Plan prices, payment rates and policies change often, and the percentages and dollar amounts in the examples are made-up round numbers for illustration, not actual rates. Check the current pricing of your platform and use your own costs before you set prices or budgets.