Shopify DTC unit economics
Shopify Profit Margin Formula Guide
Gross margin is not enough for a Shopify store. A practical order model subtracts payment processing, any third-party transaction fee, plan and app allocation, fulfillment, shipping, packaging, customer acquisition, and expected return loss.
Allocate monthly plan, app, and support costs across expected monthly orders.
Keep CAC and return loss separate because they usually drive the largest margin swings.
Compare contribution margin by channel before increasing ad spend or discount depth.
Calculate net order margin
Start with item revenue and shipping charged to the buyer. Subtract product, fulfillment, shipping, packaging, payment processing, third-party transaction fees, per-order fixed allocations, CAC, and expected returns.
- Payment fee = revenue × processing rate + fixed payment fee.
- Plan/app allocation = monthly fixed commerce tools ÷ expected monthly orders.
- Net margin = net order profit ÷ order revenue.
Use scenarios for channel decisions
Run organic, paid social, search, and returning-customer cases with different CAC assumptions. If the blended margin looks healthy only because low-cost repeat orders subsidize new-customer acquisition, track those cohorts separately.
Use the rates shown in Shopify admin for the actual plan, market, card type, and payment provider.
Worked example: an $89 Shopify order
- $31 product cost, $8.50 shipping, and $1.10 packaging
- 2.9% + $0.30 processing and 1% third-party transaction fee
- $14 CAC, $3 fixed allocation, and 5% return-loss assumption
The model estimates $23.18 net profit and a 26.0% net margin. Raising CAC or return loss reveals the maximum acquisition cost the offer can support.
Recalculate with your own numbersOfficial sources
Rates and eligibility vary by market, account, category, payment method, and program. Use the calculator for planning and the provider dashboard or statement for final reconciliation.