Shopify Profit Calculator

Running a Shopify store means juggling a monthly plan fee, payment processing, product cost, shipping and ad spend. This shopify profit calculator pulls them all together to show your real profit per order and per month, plus how many orders you need just to cover your fixed plan fee.

Most sellers look at their selling price, subtract COGS, and call the rest profit. In reality, Shopify fees, payment processing rates, shipping gaps and customer acquisition cost (CAC) can absorb 40–60% of that apparent margin. This tool forces you to account for every dollar before celebrating a sale.

Use it before launching a product to stress-test your pricing, and revisit it whenever your ad costs or supplier prices change. Knowing your real shopify margin is the foundation of a sustainable store. If you also sell on marketplaces, the Etsy Profit Calculator runs the same analysis for Etsy fees and listings.

• ▸Plan fee: Basic $39, Shopify $105 or Advanced $399 per month (billed monthly; annual billing saves roughly 25%).
• ▸Payment processing: with Shopify Payments, ~2.9% + $0.30 (Basic), 2.7% + $0.30 (Shopify), 2.5% + $0.30 (Advanced) for online cards.
• ▸Third-party gateways: using an external processor adds a 0.5–2% transaction fee on top of the gateway's own rate.
• ▸COGS: what you pay for the product itself — the single biggest lever on margin.
• ▸Shipping and fulfilment: the gap between what you charge and what it actually costs you to ship.
• ▸Advertising / CAC: ad spend divided by orders won — often the difference between profit and loss.

1. 1
   Pick your plan

   Each plan has a monthly fee and a different card rate.

2. 2
   Enter price and COGS

   Your selling price and what the product costs you.

3. 3
   Add shipping and ads

   Real shipping cost and ad spend per order (your CAC).

4. 4
   Set monthly orders

   See per-order and full monthly profit, plus break-even.

Choosing the right Shopify plan is one of the first profit decisions you make. The monthly fee is obvious, but the real question is whether the lower payment processing rates on higher tiers save you more than the extra monthly cost. The answer depends entirely on your order volume and average order value (AOV).

The Starter plan ($5/month) gives you a buy button you can embed on any website or sell through social channels, but has no full storefront. It uses the Basic card rate (5% + $0.30 via Shopify Payments) and is only sensible if you have an existing audience and need the simplest possible checkout.

Basic at $39/month is where most new stores begin. The card rate of 2.9% + $0.30 is competitive with PayPal and Stripe, and you get a full storefront, unlimited products and two staff accounts. The third-party gateway surcharge is 2% — the highest of any full plan — so using Shopify Payments is especially important here.

The Shopify plan at $105/month cuts the card rate to 2.7% + $0.30 and the third-party surcharge to 1%. The crossover point where the $66 premium pays for itself is around $5,500/month in revenue processed through Shopify Payments. Above that volume, you save money every month.

Advanced at $399/month offers 2.5% + $0.30 and only a 0.5% third-party surcharge. You also get advanced reporting and up to 15 staff accounts. The crossover versus Shopify plan is approximately $29,700/month in revenue. Many mid-size merchants find the Advanced plan starts making sense around $25,000–$50,000/month.

Shopify Plus starts at $2,300/month (minimum) and is designed for enterprise-level merchants. The card rate can drop to 2.15% for high-volume accounts, and merchants get dedicated support, a custom checkout, exclusive APIs and advanced automation tools. It typically makes economic sense above $500,000/year in revenue.

Payment processing is one of the most misunderstood shopify fees. There are two separate charges to understand: the card processing rate (charged by the payment processor on every transaction) and the additional transaction fee (charged by Shopify when you use a gateway other than Shopify Payments).

Shopify Payments is Shopify's built-in payment processor powered by Stripe. When you use it, you pay only the card processing rate — no additional Shopify transaction fee on top. For a Basic merchant charging $50 per order, the fee is $50 x 2.9% + $0.30 = $1.75. Over 200 orders a month that is $350 in processing costs.

If you use a third-party gateway like PayPal, Stripe directly, Authorize.net or any other processor, Shopify adds an extra transaction fee on top of whatever your gateway charges. On the Basic plan that extra fee is 2%, on Shopify plan 1%, on Advanced 0.5%. Using Stripe at 2.9% + $0.30 on a Basic plan means you are effectively paying 4.9% + $0.30 per order. On a $50 order that rises to $2.75 — a 57% increase over Shopify Payments.

Shopify Payments is not available in every country. If you are based in a country where it is not supported (check Shopify's official list), you must use a third-party gateway and budget for the surcharge. In those cases, switching to a higher Shopify plan reduces the surcharge and can be worth the extra monthly fee at moderate volumes.

Card-present rates (in-person via Shopify POS) are different again: Basic 2.7%, Shopify 2.5%, Advanced 2.4% — a flat rate with no $0.30 fixed component. If you sell at markets or pop-up events, these rates are highly competitive.

International credit cards, corporate cards and American Express may attract higher interchange rates depending on your processor and region. Always review your payment provider's full rate card rather than relying on headline figures alone.

COGS — Cost of Goods Sold — is the direct cost of the product you sell. For a dropshipper, COGS is the supplier price plus any import duties. For a private-label brand, it is unit cost plus packaging plus inbound freight. For a print-on-demand seller, it is the per-unit base cost charged by the fulfillment partner.

Gross profit is what remains after subtracting COGS from revenue. If you sell a product for $40 and it costs you $12 to source, your gross profit is $28 and your gross margin is 70%. Gross margin tells you how much money is available to cover all other business expenses.

Net margin is what remains after subtracting every other cost — Shopify plan fee, payment processing, shipping, advertising, apps, returns and taxes. A 70% gross margin sounds impressive, but if your CAC is $15, shipping eats $5, processing takes $1.46 and plan overhead absorbs $1 per order, your net profit is only $5.54 — a 13.9% net margin on a $40 sale.

The shopify margin figure that matters most for business health is net margin. Most successful Shopify stores aim for 20–35% net margin. Below 15%, the business is fragile — a single spike in Meta ad costs or a supplier price increase can turn profitable months red instantly.

Improving gross margin is the most reliable path to improving net margin. Every dollar you negotiate off COGS drops directly to net profit. A 5% reduction in supplier cost on a $12 COGS product saves $0.60 per unit — at 500 units per month that is $300 of pure extra profit with no extra work.

Track both metrics monthly. Rising gross margin with falling net margin signals that overhead costs (apps, ads, staff) are growing faster than revenue — a common trap when scaling Shopify stores without discipline.

Gross vs Net margin: a worked example

Customer acquisition cost (CAC) is total ad spend divided by the number of new customers (or orders) that spending generated. If you spent $1,000 on Facebook ads and got 40 orders, your CAC is $25. It is the most volatile line in your ecommerce profit model and deserves constant attention.

Return on Ad Spend (ROAS) is the inverse view: revenue generated per dollar of ad spend. $1,000 in spend producing $4,000 in revenue is a 4x ROAS. Many merchants benchmark ROAS without accounting for their actual costs, which leads to the illusion of profitable advertising.

Break-even ROAS is the ROAS at which advertising neither makes nor loses money. The formula is: Break-even ROAS = Selling Price / (Selling Price - COGS - Non-Ad Variable Costs). For a product selling at $40 with $12 COGS, $5 shipping cost and $1.46 processing fee, the non-ad variable costs total $18.46. Break-even ROAS = $40 / ($40 - $18.46) = 40 / 21.54 = 1.86x. Any ROAS below 1.86x on this product loses money on every order — even before accounting for the plan fee.

Target ROAS should be set above break-even to generate actual net profit. If you want a 25% net margin on a $40 sale (i.e., $10 net profit), your maximum allowable CAC is $21.54 - $10 = $11.54. Your target ROAS = $40 / $11.54 = 3.47x. Running ads at a 4x ROAS on this product generates approximately $10 net profit per order.

ROAS varies significantly by channel. Google Shopping typically achieves 3–6x ROAS for established products. Facebook/Meta new customer campaigns often start at 1.5–2.5x and improve with creative iteration and pixel data. Email marketing to existing customers can deliver 10–20x ROAS because the CAC for existing customers is near zero.

Track CAC separately by channel and campaign. Blended ROAS (total revenue / total ad spend) masks underperforming channels. A store might show a blended 3x ROAS while email ROAS is 15x and Meta ROAS is 1.2x — meaning the profitable channels are subsidizing a money-losing Meta strategy.

Contribution margin is the profit per order after all variable costs but before fixed costs. It is the amount each order 'contributes' toward covering your fixed monthly expenses (the plan fee, apps, software, any fixed staff costs). Once your total contribution margin equals your fixed costs, you break even; every order after that is net profit.

For Shopify stores, fixed costs include at minimum the monthly plan fee. Add any flat-rate app subscriptions, email platform fees, a bookkeeper, or a virtual assistant and your fixed cost base rises quickly. Many stores carry $200–$600/month in fixed overhead beyond the plan fee without realizing it.

Break-even order volume = Total Fixed Monthly Costs / Contribution Margin Per Order. If your fixed monthly costs are $250 (plan fee $105 + $145 in app fees) and your contribution margin per order is $12, you need to fulfill at least 21 orders per month before the store makes a single dollar of profit.

This is the number every Shopify merchant should know cold. It tells you the minimum viable volume for your current cost structure, and it changes every time you add an app, hire a freelancer, or your ad costs shift.

Improving contribution margin — by raising prices, cutting COGS, reducing CAC or trimming variable overhead — lowers your break-even volume and makes the business more resilient. Scaling volume without fixing contribution margin just means reaching profitability later.

When evaluating a new product line or ad campaign, test at a scale where you can realistically measure CAC. Spending $50 in ads to get 1–2 orders tells you very little statistically. A meaningful test for most niches requires at least $300–$500 in spend to get enough data points to calculate reliable CAC.

Shipping is a hidden margin killer for Shopify stores that is easy to underestimate. The three common models are free shipping, flat-rate shipping and exact-cost shipping — and each has different impacts on conversion rate, average order value and profit.

Free shipping is the gold standard for customer experience. Studies consistently show it increases conversion rates by 20–30%. But free shipping is never actually free — you either absorb the cost into your margin, raise prices to compensate, or set a minimum order value threshold. For lightweight products under 1 lb, US domestic shipping via USPS First Class runs $4.50–$6.50. For 2-lb packages, Priority Mail is $9–$14 depending on zone. Absorbing these costs on a low-margin product can wipe out profitability entirely.

A free-shipping threshold is often the smartest approach. Setting 'free shipping on orders over $50' on a store with an AOV of $38 pushes many customers to add another item. If your contribution margin on the second item is $10 and shipping cost is $6, you net $4 more per upsell and the customer feels they got a deal. Studies show free-shipping thresholds increase AOV by 7–15% on average.

Flat-rate shipping is simple for customers and predictable for your margin model. Choose a rate that covers your average actual shipping cost across all SKUs and zones. If your average shipping cost is $7.50, charging $5.99 flat rate means you subsidize $1.51 per order — acceptable if the conversion benefit outweighs the cost. Charging $8.99 flat rate on a $7.50 average cost means you profit slightly on shipping, which is also fine and transparent.

Real-time calculated shipping passes the exact carrier cost to the customer. This maximizes margin accuracy but can shock customers with high rates for remote zones and reduce conversion. It works best for heavy or oversized products where shipping costs vary dramatically and absorbing them is not feasible.

Shopify Shipping (in partnership with USPS, UPS, DHL and others) offers negotiated rates that can be 20–50% below retail carrier prices depending on volume. Even at Basic plan level, the discounts are meaningful. Always compare Shopify Shipping rates against your current carrier before using a third-party logistics provider.

For dropshipping stores using AliExpress or similar, factor in the actual shipping time and cost from supplier to customer. ePacket or AliExpress Standard Shipping might cost $1–$3 but take 15–30 days. Customers who experience long delivery times leave negative reviews and initiate chargebacks — costs that hurt both margin and reputation.

The Shopify App Store contains over 8,000 apps and it is dangerously easy to stack up $300–$500/month in subscriptions without noticing. Each app solves a real problem, but collectively they become a significant fixed-cost drag on shopify margin.

Common app categories and typical costs: Email marketing (Klaviyo, Omnisend, Mailchimp) $30–$300/month depending on list size. Review apps (Judge.me, Stamped, Yotpo) $15–$199/month. Upsell/cross-sell apps (ReConvert, Zipify) $20–$50/month. Subscription billing (Recharge, Bold) $99–$300/month. Loyalty programs (Smile.io, LoyaltyLion) $49–$299/month. SEO tools $20–$100/month. Abandoned cart and SMS tools $25–$150/month.

A store running even a modest stack — email, reviews, upsell, SMS and an SEO tool — can easily accumulate $200–$400/month in app fees. At a $12 contribution margin per order, those apps alone require 17–33 additional orders per month just to cover their cost.

Audit your app subscriptions quarterly. Uninstall apps you installed speculatively and never configured. Many apps offer a free tier that covers most small-store needs — Klaviyo is free up to 500 contacts, Judge.me has a perpetually free plan, and Shopify's built-in email tool covers 10,000 emails/month free.

Premium themes are a one-time cost of $180–$380, but they are worth evaluating carefully. A well-designed theme can improve conversion rate by 5–15%, generating far more in lifetime revenue than the purchase price. The free Shopify themes (Dawn, Craft, Studio) are genuinely capable and many stores run them profitably without ever buying a premium theme.

Email marketing deserves special mention as an investment rather than pure overhead. A well-run Klaviyo account with a welcome series, abandoned cart flows and post-purchase sequences typically generates 20–30% of total store revenue from a list that costs pennies per email to reach. The ROI on email is typically 10–40x, making it the highest-return channel for most Shopify stores once you have a list of 1,000+ subscribers.

Chargeback processing fees ($15 per dispute from Shopify, plus potential refund of the order value) are often overlooked. A 1% chargeback rate on 200 orders/month means 2 chargebacks costing $30 in fees plus potentially $80 in lost product value — a material cost for high-volume stores. Keep chargeback rates below 0.5% to avoid payment processor penalties.

Pricing is the fastest lever for improving ecommerce profit without changing costs. A 10% price increase on a product with 40% gross margins improves gross margin to 45% — while a 10% COGS reduction only moves gross margin to 44%. Yet most merchants obsess over supplier negotiations and ignore pricing strategy entirely. For a broader look at all our tools, visit CalcSuite to see what else might help.

Keystone pricing is the traditional retail rule of doubling the wholesale cost (a 50% gross margin or 2x markup). In ecommerce, 50% gross margin is often the minimum viable threshold once ads, processing and shipping are factored in. Many successful Shopify stores operate at 60–70% gross margin to leave room for CAC and overhead.

Psychological pricing exploits how customers perceive value. Ending prices in .99 or .95 consistently outperforms round numbers in conversion rate tests — $29.99 feels meaningfully cheaper than $30 even though the difference is a penny. Charm pricing works especially well on sub-$100 impulse purchases. Above $100, round numbers sometimes signal premium quality, so $150 can outperform $149.99 for aspirational products.

Bundle pricing increases average order value (AOV) while reducing effective CAC. If your CAC is $15 per transaction regardless of order size, a bundle that raises AOV from $35 to $65 doubles your revenue per customer acquisition at almost no extra cost. Structure bundles to create clear perceived savings — 'Buy 2, get 15% off' or 'Starter kit: $79 (valued at $105)' — and price them so the bundle gross margin is equal to or better than selling items individually.

Volume and tiered pricing works well for consumable products. Offering 1 unit for $19.99, 3 for $49.99 and 6 for $89.99 conditions customers to self-select into larger purchases. The 3- and 6-unit offers have lower gross margin per unit but much higher gross profit per transaction and far better CAC efficiency.

Free-shipping thresholds are a pricing strategy as much as a shipping policy. Setting the threshold 15–20% above your current AOV creates a natural pull toward larger baskets. If your AOV is $42, a $55 free-shipping threshold motivates customers to add a $13 item rather than pay $6.99 shipping. Test different thresholds — the optimal point varies by niche and product catalog.

Subscription pricing transforms one-time buyers into predictable revenue. Shopify supports subscription products via apps like Recharge and Bold Subscriptions. Subscriptions typically command a 10–20% discount vs one-time pricing, but the predictability of recurring revenue and near-zero CAC for renewal orders dramatically improves unit economics. A subscriber with a 12-month LTV of $360 is worth more than three one-time customers at $120 each, even at the discounted price.

Three business models dominate Shopify stores targeting low startup costs: dropshipping, print-on-demand (POD) and private label. Each has a fundamentally different cost structure, risk profile and profit ceiling. Understanding the economics of each is essential before choosing which path to pursue.

Dropshipping involves listing products from a supplier (often via AliExpress, CJ Dropshipping or a domestic wholesaler) and having the supplier ship directly to your customer when an order is placed. You never touch inventory. COGS is the supplier price plus any shipping cost you absorb. Gross margins are typically 30–50% because supplier prices reflect retail-adjacent pricing without volume discounts. Dropshipping is easy to start but hard to differentiate — you are selling the same product as dozens of other stores, so competition erodes both price and margin over time. Many dropshippers also test products on Etsy first; the Etsy Profit Calculator helps you size that channel's fees before committing.

Print-on-demand adds custom design to base products (t-shirts, mugs, phone cases, posters) via platforms like Printful, Printify or Gooten. COGS for a Printful unisex t-shirt starts around $12–$15; a store selling it at $30 has a 50–60% gross margin before shipping. POD eliminates inventory risk entirely — you only pay when an order is placed. The downside is that POD COGS is higher than bulk manufacturing, capping your margin ceiling. Differentiation comes from design quality and brand storytelling rather than product uniqueness.

Private label means ordering bulk inventory with your branding from a manufacturer (often via Alibaba or a domestic OEM). Minimum order quantities (MOQs) typically start at 100–500 units. The tradeoff is upfront capital risk, but the reward is dramatically lower COGS. A supplement private-labeled from a US contract manufacturer at 500-unit MOQ might cost $6/unit versus $18 dropshipped. At a $35 selling price, gross margin jumps from 49% to 83%. That extra margin absorbs CAC far more comfortably and creates room for aggressive paid advertising.

The most profitable long-term Shopify stores typically start with dropshipping to validate a niche, then transition winning products to private label once they have enough volume data. This path combines low initial risk with a high-margin endpoint. The transition from dropshipping to private label on a proven $30 product can increase net profit per order from $4 to $14 — a 250% improvement in net margin. Some store owners also diversify income through content; if that describes you, the YouTube Earnings Estimator can help you model that side of revenue.

Taxes are often the last thing a new Shopify merchant thinks about, and one of the most expensive surprises if ignored. In the United States, sales tax rules are governed by the Supreme Court's 2018 South Dakota v. Wayfair decision, which means most states can require you to collect and remit sales tax even if you have no physical presence there — purely based on sales volume (typically $100,000/year or 200 transactions in a state).

Shopify can automatically collect sales tax in states where you have nexus, but you must configure your tax settings correctly and register with each state's department of revenue. Failing to collect and remit required taxes exposes you to back liability, penalties and interest. Services like TaxJar or Avalara integrate with Shopify to automate registration, filing and remittance for a monthly fee of $20–$200 depending on volume.

For international sales, VAT (Value Added Tax) applies in the EU, UK and many other markets. EU VAT rates vary from 17–27% by member state. The EU's One-Stop Shop (OSS) scheme allows merchants to register once and file a single return for all EU sales above 10,000 EUR per year. In the UK, VAT registration is required once annual sales exceed 85,000 GBP. Shopify Markets handles VAT collection and remittance in supported regions, but verify that your configuration is correct for every market you sell into.

Import duties affect both your COGS and your international customers. If you dropship from China to US customers, US import duties may apply when packages arrive — particularly for goods over $800 (the de minimis threshold) or categories with specific tariffs. Post-2025 trade policy changes have affected the de minimis exemption for Chinese goods; check current CBP guidance before building a China-sourced dropshipping business.

Chargebacks are disputes filed by customers with their card issuer, bypassing Shopify's normal return process. Each chargeback costs you the disputed amount plus a $15 dispute fee from Shopify. You can contest chargebacks with delivery evidence and communication records, but win rates are typically 30–40%. High chargeback rates (above 0.8–1%) trigger warnings from payment processors and can lead to account suspension. Prevention is far cheaper than defense: use accurate product descriptions, prominent shipping time disclosures, easy return policies and order tracking — all of which reduce customer frustration and chargeback motivation.

The secret to scaling profitably on Shopify is not finding a lower CAC — it is increasing the lifetime value (LTV) of each customer so that your current CAC becomes sustainable at larger volumes. CAC at scale almost always rises as you exhaust warm audiences and move to colder traffic. LTV must rise to match it. Merchants who also offer services or consulting alongside physical products may find the Freelance Rate Calculator useful for pricing that work correctly.

Customer Lifetime Value (LTV or CLV) is the total gross profit generated by a customer across all their purchases, discounted for time. The basic formula: LTV = Average Order Value x Purchase Frequency x Gross Margin x Customer Lifespan. A customer who buys twice per year at $50 AOV with 60% gross margin and stays for 3 years has an LTV of $50 x 2 x 0.60 x 3 = $180. You can afford to spend up to $180 to acquire that customer and still generate profit — far more than a $50 one-time purchase implies.

Improving purchase frequency is the fastest way to improve LTV without changing prices. Email and SMS marketing sequences targeting past customers with relevant offers, replenishment reminders (for consumables) and product launches are the primary tools. A customer who buys 2.5x per year instead of 2x generates 25% more LTV with no additional acquisition cost.

Retention starts with the post-purchase experience. A branded unboxing with a thank-you card, a clear return policy and proactive shipping notifications reduce buyer's remorse and build emotional connection to the brand. Stores with strong post-purchase NPS (Net Promoter Scores) see 30–50% higher repurchase rates within 90 days compared to stores that treat the transaction as finished at delivery.

Referral programs turn your best customers into an acquisition channel. A well-designed referral program (e.g., 'Give $10, Get $10' via ReferralCandy or Smile.io) acquires new customers at a fraction of paid ad CAC. Referred customers also tend to have higher LTV because they arrived with social proof from a trusted friend.

Subscription models (for consumables, replenishable products or curated boxes) transform LTV calculation entirely. A subscriber paying $39/month who stays subscribed for 8 months generates $312 in revenue. If gross margin is 65%, that is $203 in gross profit from a single acquisition. This completely changes the math on CAC — you can profitably spend $80–$100 to acquire a subscriber who would never be economic as a one-time buyer.

When scaling paid advertising, use LTV-based ROAS targets rather than first-purchase ROAS. If a customer's 90-day LTV is 2.3x their first purchase value, your blended ROAS target on acquisition campaigns can be set proportionally lower, allowing you to bid more aggressively and reach larger audiences without destroying profitability — as long as your retention systems reliably convert first-time buyers into repeat customers.

• ▸Target a 25%+ net margin per order so ad cost swings do not wipe out profit.
• ▸Lower CAC with better creative and retargeting — it is usually the largest variable cost.
• ▸Raise average order value with bundles, upsells and free-shipping thresholds.
• ▸Switch to annual Shopify billing to cut the plan fee by roughly 25%.
• ▸Negotiate COGS or order volume discounts with suppliers as you scale.
• ▸Use Shopify Payments instead of a third-party gateway to avoid the extra transaction fee.
• ▸Audit your app stack quarterly — cancel subscriptions you do not actively use.
• ▸Invest in email flows (welcome, abandon cart, post-purchase) to lower blended CAC.
• ▸Track LTV by acquisition channel — double down on channels that produce high-LTV customers.
• ▸Set a free-shipping threshold 15–20% above your current AOV to lift basket size.

Understanding the vocabulary of ecommerce profit analysis helps you make faster, better decisions. Here are the most important terms used when working with a shopify profit calculator or analyzing dropshipping profit. Many of the same concepts — margins, COGS, fees — apply when selling on other platforms, so exploring our all our calculators can round out your analysis.

• ▸AOV (Average Order Value): Total revenue divided by total number of orders. Increasing AOV is one of the highest-leverage moves in ecommerce because it raises revenue per transaction without raising CAC.
• ▸Break-even ROAS: The minimum return on ad spend required for paid advertising to not lose money. Equal to Selling Price divided by Gross Profit before ad costs.
• ▸CAC (Customer Acquisition Cost): Total marketing/ad spend divided by the number of new customers acquired. The primary variable cost in most paid-traffic Shopify stores.
• ▸Chargeback: A payment dispute initiated by a customer through their card issuer. Each costs $15 in dispute fees plus potential loss of the order value. High rates (above 0.8%) risk payment processor penalties.
• ▸COGS (Cost of Goods Sold): The direct cost of producing or acquiring each unit sold. For dropshippers this is supplier price plus inbound shipping.
• ▸Contribution Margin: Revenue minus all variable costs (COGS, processing, shipping, ad spend) per order. This is the amount each order contributes toward covering fixed costs and generating profit.
• ▸Gross Margin: (Revenue - COGS) / Revenue, expressed as a percentage. Indicates how efficiently you source products but does not include operating expenses.
• ▸LTV / CLV (Lifetime Value / Customer Lifetime Value): Total gross profit generated by a customer across all purchases over their relationship with your store.
• ▸Net Margin: (Revenue - All Costs) / Revenue. The truest measure of business profitability after every expense is accounted for.
• ▸ROAS (Return on Ad Spend): Revenue generated per dollar of advertising spend. A 4x ROAS means $4 revenue per $1 spent. Must exceed break-even ROAS to be profitable.
• ▸Shopify Payments Fee: The card processing rate charged by Shopify Payments — 2.9% + $0.30 (Basic), 2.7% + $0.30 (Shopify), 2.5% + $0.30 (Advanced) for online transactions.
• ▸Transaction Fee: An additional fee (0.5–2%) charged by Shopify when you process payments through a third-party gateway instead of Shopify Payments.
• ▸Dropshipping Profit: Net profit on a dropshipped order after supplier cost, Shopify fees, payment processing, shipping subsidy and ad spend are all deducted.
• ▸Ecommerce Profit Margin: The net margin percentage a Shopify or ecommerce store earns across all revenue, accounting for every cost from COGS to chargebacks.
• ▸Keystone Markup: A 100% markup on COGS (2x cost), producing a 50% gross margin. The traditional retail baseline, and often the minimum viable markup for Shopify stores running paid ads.