How to calculate profit per order (and why revenue lies)
A $40 order feels great until you subtract everything that came out of it. Profit per order is the number that tells you whether a sale actually helped. It's also the fastest way to compare products and sales channels fairly.
The formula
Profit per order = what the buyer paid − product cost − fees − shipping and packaging − ad cost − refund allowance
Sales tax the marketplace collects and sends to the state isn't your revenue, so leave it out of both sides.
Step by step
- Start with what the buyer paid you: item price plus any shipping charged, minus discounts and coupons.
- Subtract product cost: materials or supplier cost per unit, including freight in. Our COGS guide shows how to get this number.
- Subtract every fee on the order: listing or referral fees, transaction fees, payment processing, currency conversion, and any offsite-ad fee on that sale. Rates differ by channel; see Etsy fees, Shopify costs, and Amazon FBA fees.
- Subtract shipping and packaging: the actual label you bought, plus mailers, tissue, inserts, and tape.
- Subtract ad cost per order: total ad spend for the period divided by orders, or the per-sale fee if it only applies to ad-driven orders.
- Subtract a refund allowance: your refund rate times revenue, so the occasional return doesn't wreck the math.
Worked example (example numbers)
| Line | Amount |
|---|---|
| Buyer paid (item $36 + shipping $4) | $40.00 |
| Product cost | −$11.50 |
| Marketplace + payment fees (example 10% + $0.45) | −$4.45 |
| Shipping label | −$5.10 |
| Packaging | −$0.90 |
| Ad cost per order (example) | −$3.00 |
| Refund allowance (example 3% of $40) | −$1.20 |
| Profit per order | $13.85 |
That's a 34.6% margin on a $40 order, a long way from the 68% you'd get if you only subtracted product cost from the item price.
What to do with the number
- Rank your products by profit per order, not revenue. The top seller by sales is often not the top earner.
- Compare channels. The same product can earn noticeably different amounts on Etsy, Shopify, and Amazon once each channel's fees and shipping are counted.
- Set an ad ceiling. Profit per order before ads is the most you can spend to win a sale and still break even on it. See contribution margin.
- Fix the price. If an item makes under a few dollars per order, it may need a price increase or a cheaper way to ship. Our pricing guide helps.
Remember fixed costs
Profit per order doesn't include monthly costs like a store plan, software, or subscriptions. Add up all your order profits for the month, subtract those, and you get your real monthly profit. A simple monthly P&L keeps that tidy.
Educational content only, not financial, tax, or accounting advice. Fee examples are illustrative; check your own seller account.
More seller guides
- Etsy fees explained: what Etsy actually takes from each sale
- How to calculate your Shopify profit margin (and what a good one looks like)
- Amazon FBA fees in 2026: what you pay and how to estimate it
- Quarterly estimated taxes for online sellers: a plain-English guide
- How to calculate COGS (cost of goods sold) for your online store
- Reorder point formula for small online shops (with safety stock examples)
- How to track returns and refunds as an online seller (and calculate refund rate)
- How to make a simple monthly profit and loss statement for your online shop
- What to include on an invoice: a checklist for small sellers and makers
- How to price handmade products: a simple formula that covers fees and pays you
- Break-even point for online sellers: formula, example, and how to lower it
- Inventory turnover ratio: how fast your stock actually sells
- Gross vs net profit margin: what each one tells an online seller
- Landed cost: the true cost of a product once it reaches your shelf
- Markup vs margin: why a 50% markup is not a 50% margin
- Contribution margin: what each order really adds to your business
- Free shipping vs charging for shipping: which one makes you more money?
- Safety stock formula: how much extra inventory should you keep?
SellerSheetKit is not affiliated with Etsy, Shopify, or Amazon. Fee figures are summarized from official sources on the date above and can change; verify against your seller account. Educational content only — not tax, legal, or accounting advice.