Calculate true net profit per sale after product cost, advertising, platform fees, and shipping. Know your real margins before scaling.
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Sale Price$54.00
$1$1K$2K
Product Cost (COGS)$13.00
$0$500$1K
Platform Fee %3.2%
0%10%20%
Shipping Cost$4.50
$0$25$50
Ad Spend per Sale (CAC)$9.00
$0$100$200
Net Profit per Sale
$25.77
after all costs
Net margin: 47.7% · Good margin — solid for physical products.
47.7%
Net Margin
6.0x
ROAS
$2,577
Profit @ 100 sales/mo
$36.23
Break-Even Price
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The Real Cost of Selling Online
Most first-time e-commerce sellers price based on COGS alone and forget three critical cost buckets: platform/payment fees (2.9–15%), customer acquisition cost (often the largest variable), and fulfillment/shipping. A product that looks like 60% gross margin can easily drop to 15% net after ads and platform fees.
ROAS (Return on Ad Spend) is the critical metric for scaling. Break-even ROAS = 1 ÷ (ad spend as a percentage of revenue). If you're spending $9 to acquire a customer for a $54 sale, that's 16.7% of revenue, giving a break-even ROAS of 6x. Anything above 6x is profitable at scale; below is burning cash.
What is a good e-commerce profit margin?
20–30% net margin is solid for physical products. Under 10% is risky — one supplier price increase or shipping surge wipes profits. Digital products and subscriptions can achieve 60–80% margins. Fashion and accessories: 40–60% gross, 15–25% net.
How do I calculate break-even price for e-commerce?
Break-even price = COGS + shipping + platform fees + ad spend per unit. Any sale above this is profitable; below and you're losing money on each unit. Build in at least 20% margin above break-even to absorb returns and unexpected costs.
What is ROAS and how do I calculate it?
ROAS = Revenue ÷ Ad Spend. A $54 sale from $9 in ads = 6x ROAS. Your break-even ROAS is 1 ÷ (ad cost ratio). If ads are 20% of revenue, break-even ROAS = 5x. Target 2–3x above break-even to ensure profitable scaling.
How much should e-commerce ad spend be as a percentage of revenue?
Most sustainable e-commerce businesses target 10–20% of revenue on advertising. Under 10% with strong margins is excellent. Over 25% is a warning sign unless LTV (lifetime value) justifies the upfront acquisition cost.
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