Net profit after COGS, platform fees, ad spend, shipping, and returns

Why Gross Profit Lies

Ecommerce operators look at gross profit (revenue minus COGS) and see healthy margins. Then they look at the bank account and find something smaller. The gap comes from layers that do not appear in a basic margin calculation. Platform fees on Amazon, Shopify, eBay, Etsy run 3-15% of revenue. Ad spend can be 10-30% of revenue. Shipping eats 5-15% unless passed fully to the customer. Returns eat 5-20% of revenue for apparel, less for other categories. Stack these together and a 60% gross margin becomes a 10-20% net margin. This calculator shows both layers so the gap is visible.

Platform Fees by Channel

Amazon FBA: 15% referral fee plus 10-30% FBA fulfillment fees depending on size and weight. Total platform fees commonly 25-40% of revenue for small items. Shopify Basic: 2.9% payment processing plus 39/month flat. No percentage platform fee, but you bear full marketing costs. Etsy: 6.5% transaction fee plus 3% + 0.25 payment processing. Total roughly 10% of revenue. eBay: 10-15% depending on category. WooCommerce self-hosted: just payment processing (2.9%), but full infrastructure and marketing overhead.

The Return Rate Killer

Apparel returns average 20-30% of units sold. Electronics: 8-12%. Furniture: 5-8%. Beauty and consumables: 2-5%. A return rate above 15% usually wipes out the profit on correctly-fulfilled orders because returned items incur the original shipping cost, restocking or disposal cost, and the credit card processing fee (usually not refunded by the processor). The calculator treats returns as a straight revenue deduction, but real return costs are higher once handling and restocking are included. Add 2-3% to return rate input to approximate this.

Ad Spend Relative to Revenue

Healthy ecommerce campaigns run 10-25% of revenue as ad spend. Below 10% usually means either strong organic traffic (SEO, email list) or underinvestment. Above 25% means either startup phase (customer acquisition push) or a broken unit economics model. The calculator takes ad spend as a dollar figure — you can cross-reference with ROAS calculator to see if spend is proportionally matched to return.

Worked Example

Shopify apparel brand monthly numbers. Revenue: 50,000. COGS: 15,000 (30% of revenue). Platform fees 4% (Shopify + payment processing): 2,000. Ad spend: 12,000 (24% of revenue). Shipping costs: 4,000 (8% of revenue — some passed to customer). Return rate: 15%, returns cost: 7,500. Net profit: 50,000 - 15,000 - 2,000 - 12,000 - 4,000 - 7,500 = 9,500. Net margin: 19%. Gross profit: 35,000. Gross margin: 70%. The 51 percentage-point gap between gross and net margin is where most ecommerce operators lose visibility.

What This Calculator Does Not Include

Variable labor costs (packing, customer service) if not already in COGS. Warehouse and 3PL storage fees if not already in shipping. Software subscriptions (email platform, design tools, inventory management). Professional fees (accounting, legal). Payment processing for non-platform channels. Chargebacks and fraud. Tax (sales tax collected but not paid through, income tax on profits). For full monthly P&L, add these as a lump sum to your COGS or treat as separate overhead. Also missing: customer acquisition cost beyond ad spend (affiliate commissions, influencer deals, sponsorship costs). If these run meaningfully above 5% of revenue, add them to ad spend so the net profit line stays honest.