How to calculate your Shopify profit margin (and what a good one looks like)
Shopify's dashboard will happily show you revenue. It will not show you profit. Between your plan, payment processing, apps, shipping, ad spend, and product cost, a store doing $10,000 a month can be very profitable or quietly losing money. This guide shows how to calculate Shopify profit margin at two levels — per order and per month — using current 2026 Shopify pricing.
Rates are from Shopify's pricing page and the Help Center article on third-party transaction fees, checked October 2026 (US, USD). Rates vary by country and plan; check your admin billing page.
Gross margin vs. net margin
Two numbers matter, and people mix them up constantly:
- Gross margin = (revenue − cost of goods sold) ÷ revenue. It tells you whether the product itself is priced well.
- Net margin = (revenue − all costs) ÷ revenue. It tells you whether the business makes money after fees, apps, ads, and everything else.
A product with a 60% gross margin can still produce a 5% net margin if ads and fees eat the rest. You want to know both.
The Shopify costs to include
Plan subscription
In the US, Shopify's Basic plan is $39/month billed monthly or $29/month billed yearly; Grow is $79/month on annual billing and Advanced is higher. Treat the subscription as a fixed monthly cost, not a per-order cost.
Payment processing
With Shopify Payments, standard online card rates are 2.9% + 30¢ on Basic and 2.7% + 30¢ on Grow, with lower rates on Advanced. Premium cards cost more on Basic (Shopify lists 3.5% + 30¢), international cards add about 1%, and in-person card rates are 2.6% + 10¢ on Basic. Processing fees are not returned when you refund an order.
Third-party transaction fees
If you use an outside payment provider instead of Shopify Payments, Shopify adds a transaction fee of 2% on Basic (lower on higher plans) on top of your provider's own fees. For stores created on or after May 12, 2025, the fee can also apply to the portion of an order paid with gift cards or store credit. This is one of the easiest margin leaks to miss.
Apps, theme, and domain
Review, upsell, email, and subscription apps commonly add $50–$300 a month. A premium theme is usually a one-time cost; spread it over 12 months in your P&L.
Shipping and packaging
Your actual label cost minus what customers paid for shipping. If you offer free shipping, the whole label is a cost.
Marketing
Meta, Google, TikTok, and influencer spend. For many Shopify stores this is the biggest cost after product.
Cost of goods sold
The landed cost of each unit — product, inbound freight, duties, packaging. See how to calculate COGS.
Per-order profit: a worked example
A customer on a Basic-plan store buys a $45 item and pays $5 shipping with a standard US card. Total charged: $50.
| Line | Amount |
|---|---|
| Revenue (item + shipping) | $50.00 |
| Shopify Payments (2.9% × $50 + $0.30) | −$1.75 |
| COGS (landed unit cost) | −$14.00 |
| Shipping label + box | −$7.20 |
| Contribution before ads | $27.05 (54%) |
| Ad cost per order (e.g. $15 CPA) | −$15.00 |
| Contribution after ads | $12.05 (24%) |
If the same store ran a third-party processor at 2.9% + 30¢ instead, Shopify's extra 2% would cost another $1.00, dropping contribution after ads to $11.05.
Monthly net margin: the number that matters
Per-order contribution has to cover fixed costs. Suppose the store above does 300 orders in a month:
- Contribution after ads: 300 × $12.05 = $3,615
- Shopify Basic (monthly billing): −$39
- Apps: −$120
- Email platform, software, misc.: −$80
- Returns and refunds (say 3% of revenue): −$450
Net profit ≈ $2,926 on $15,000 revenue, a net margin of about 19.5%. Change the ad CPA from $15 to $25 and net profit falls to about $(−74) — the store is break-even at best. That sensitivity is why you need to look at margin monthly, not just per product.
What is a "good" Shopify profit margin?
There is no universal number — it depends on category, price point, and how much you rely on paid traffic. As rough rules of thumb that many operators use:
- Aim for a gross margin of 50% or more if you plan to buy traffic with ads; lower gross margins leave little room for acquisition costs.
- A net margin of 10–20% is a healthy target for a small DTC store; consistently below 5% means one bad month can wipe out a quarter.
- Know your break-even ROAS: 1 ÷ (contribution margin before ads as a %). In the example, 1 ÷ 0.54 ≈ 1.85. Any ad that returns less than $1.85 per $1 spent loses money on the first order.
Five ways to improve margin without raising prices
- Use Shopify Payments if available, to avoid the third-party transaction fee.
- Audit apps quarterly. Cancel anything you would not reinstall today.
- Raise average order value with bundles and free-shipping thresholds; the fixed 30¢ and label costs get spread over more revenue.
- Renegotiate COGS once volume is predictable, or cut packaging cost.
- Track returns by reason. A sizing or quality issue often costs more than any fee.
Selling on marketplaces too? Compare with Etsy fees and Amazon FBA fees, and remember to set aside cash for quarterly taxes.
More seller guides
- Etsy fees explained: what Etsy actually takes from each sale
- 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
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.