Shopify margin calculator

The formula

Two steps. Work out the fee, then take everything off the price.

fee = (price × fee rate) + fixed fee
you keep = price − cost − shipping − fee
margin = (you keep ÷ price) × 100

The fee comes off the full amount the customer paid, shipping included. That catches people out on low value orders with high postage.

A worked example

You sell at 50. The unit costs you 20 landed, and shipping costs you 4. The payment fee is 2.9 percent plus 30p.

The fee is 1.45 plus 0.30, so 1.75. Take 20, 4 and 1.75 off 50 and you keep 24.25.

That is a margin of 48.5 percent. Your break even price is 25.03, which is the lowest you could discount to before the order costs you money.

What a good number looks like

Thirty percent and up leaves room for a discount, a return and a reship. Between ten and thirty is workable but thin. Under ten percent, one return wipes out several orders.

Returns are the reason the thresholds sit that high. A product on a ten percent margin with a one in ten return rate makes nothing across the year, and it still cost you the picking and the postage both ways.

Where the number comes from

The answer is only as good as the cost you put in. If your Shopify cost per item field holds the invoice price, this margin is too high by whatever freight and duty came to.

Run the shipment through the landed cost calculator first and use that figure here. Then check the product is actually selling with the inventory turnover calculator, because a good margin on a line that sits for a year is worse than a thin margin on one that moves.