E-commerce profit and margin: a practical formula
Calculate contribution profit per order without confusing revenue, markup, margin, fees, refunds, and advertising cost.
The useful formula
Start with expected revenue after refunds. Subtract product cost, fulfilment, payment fees, marketplace fees, and advertising cost. Profit margin is profit divided by revenue after refunds.
What belongs in the inputs
Use the fees and refund rate from your own account and period. Do not copy a marketplace rate from an old article: plans, countries, categories, and payment methods differ.
How to use the result
Compare the break-even price with the real selling price, then test realistic and cautious scenarios. A positive gross margin can still become a loss after fulfilment and acquisition costs.