Start with the decision, not the spreadsheet
Profit calculation gets messy because Shopify isn’t one business model. A store can be low-AOV DTC with heavy paid acquisition, higher-AOV with light paid and stronger retention, dropshipping with thin margin, apparel with returns as a primary cost center, or wholesale with predictable volume and low margin.
The goal is not a perfect “accounting profit” number. The goal is a profit view that matches the decision you’re making: pricing, scaling ads, hiring, or cash planning.
The profit stack most operators end up using
A simple stack tends to hold up under pressure: revenue you actually keep, fees, product costs, fulfillment costs, expected losses (returns/refunds/chargebacks), acquisition cost, then overhead allocation if you want full unit economics.
Most errors come from step one. People start at order value and forget that discounts, refunds, and shipping subsidies reduce the revenue they keep.
Why fixed payment fees punish low AOV
Percent fees get the attention, but the fixed part is what makes low AOV harder. On a $25 order, a $0.30 fixed fee is already 1.2% before the percent fee starts. On a $120 order it’s background noise.
If you sell low AOV and rely on paid traffic, you usually need one of: bundles, multi-unit offers, subscriptions, or consistently higher conversion rate. Otherwise the CPA ceiling is too low to scale.
Contribution margin is what ads care about
When people say “we can’t scale,” they usually mean ads consume contribution margin too quickly. Contribution margin is what’s left after the true variable costs: COGS, packaging, shipping label/fulfillment variable costs, and payment/transaction fees.
That number sets your real CPA cap. If your CPA cap is lower than what the channel will deliver at your volume, you need to change the offer, pricing, AOV, COGS, or retention — not the spreadsheet.
Returns are an expected cost, not a surprise
Returns feel occasional until you run the expected-value math. A 6–12% return rate can reduce net profit more than most operators realize, especially if you pay return shipping or resell at a discount.
If returns are meaningful in your category, build them into pricing. Don’t wait for the monthly report to show the problem.
A practical workflow that stays useful
Use a per-order profit model to set price floors and CPA caps. Use scenario comparisons to test CPA sensitivity and return-rate sensitivity. Then reconcile monthly profit separately with overhead so you don’t confuse unit economics with accounting.
If you want to sanity-check your inputs quickly, use the Shopify Profit Calculator and treat it like a “decision calculator,” not a report.