Use the output as a threshold, not a forecast.
Gross margin is not the same as money kept from an order. Gross margin usually stops after product cost, while an ecommerce order can still incur payment fees, pick-and-pack, shipping subsidy, expected refund loss and acquisition cost.
The calculator presents gross economics and fully loaded per-order economics side by side. That makes it suitable for pricing, bundle design, channel comparison and deciding whether a campaign has enough contribution to scale.
Product profit and margin formula
Net order revenue is list price after the average discount. Gross profit subtracts product cost and inbound freight. Net profit then subtracts outbound logistics, platform and payment fees, expected refund loss and acquisition cost.
Net margin is net profit divided by net order revenue. Markup is the price uplift over landed product cost; it is not interchangeable with margin. The break-even list price reverses the fee and discount assumptions to solve for zero profit.
A product listed at 49.00 with a 5% average discount does not begin with 49.00 of usable revenue. The calculator first derives net revenue, then subtracts landed product cost and each per-order expense.
Limitations to keep visible
- Fixed company overhead is not included unless you allocate an amount per order.
- The model treats the expected refund loss as an average. High variance or delayed return windows can create larger cash-flow risk.
- Pass-through sales tax or VAT should normally be excluded from revenue unless your accounting treatment requires otherwise.
Frequently asked questions
What is the difference between margin and markup?+
Margin divides profit by selling price. Markup divides the price uplift by cost. The percentages can be very different even for the same product.
Should ad spend be included?+
Include a blended acquisition cost when evaluating order-level profitability. Also review the break-even ROAS calculator for campaign thresholds.
How should I allocate overhead?+
For a quick fully loaded estimate, divide realistic monthly fixed operating costs by expected monthly orders and add that amount to fulfillment or another per-order cost field.