How to calculate e-commerce profit after fees

Start with realized sales

Use a consistent period and currency. Separate tax collected for a tax authority from your own revenue when that treatment applies. Subtract discounts and refunds once. If your platform report already gives net sales, subtracting refunds again understates revenue. Orders placed, fulfilled and paid can fall in different periods.

Build an order-level example

Assume 100 completed orders at a net selling price of 60. Per order, product cost is 25, fulfilment is 5, payment and platform fees total 2, and the shipping subsidy is 3. Variable cost before advertising is 35 and contribution before ads is 25 per order. Total contribution before ads is 2,500. After 800 advertising spend and 1,000 fixed overhead, estimated operating profit is 700.

Keep fee bases explicit

A percentage fee may apply to a different amount than your revenue measure, such as a payment including shipping or tax. Calculate the actual fee according to your provider agreement, then enter that amount. Do not assume every marketplace uses the same percentage or refunds fees on returned orders.

Separate missing data from zero costs

A missing purchase-cost field is not evidence that a product was free. Flag unknown costs and compare a plausible range before using the result. If expected returns are represented by a per-order allowance, avoid also subtracting the same realized returns in the scenario. Explain whether the model is historical or forward-looking.

Connect profit with cash timing

A profitable month can still consume cash if inventory was bought before sales arrived or payouts are delayed. The contribution calculator evaluates profitability; a separate cash schedule should place purchases and payouts when money moves. Neither an order feed nor an advertising dashboard by itself establishes complete business profit.

Reconcile orders with the payment statement

A payment-provider payout may combine transactions from several days, subtract fees and hold back a reserve. It is not automatically the sales revenue for the day it reaches the bank. Start with completed sales and refunds for your chosen reporting basis, then reconcile the resulting receivable to settlements separately.

This distinction also matters for marketplace exports. If a fee has already been deducted in a net settlement column, using that column as revenue and subtracting the fee again understates the result. Keep original column names and document each transformation.

Test the cost of a promotion

In the example, lowering net price from 60 to 54 while holding variable cost at 35 reduces contribution from 25 to 19 per order. Keeping advertising and overhead unchanged, the business needs at least 132 orders to match the original 2,500 pre-ad contribution: 2,500 / 19 rounded upward.

At only 120 orders, contribution is 2,280 and profit after the same 800 advertising and 1,000 overhead is 480, below the original 700. This assumes fee amounts stay constant; if fees vary with selling price, update them before relying on the comparison.

Create a useful monthly review pack

Bring together retained sales, fulfilled units, product costs, variable delivery expenses, acquisition spend and overhead. Separate channels or product groups only when the underlying costs can be allocated meaningfully. Mark shared-cost allocations as allocations, rather than presenting them as directly observed product expenses.

Then review which information is missing and which decision the model can support. A product with positive contribution may help cover shared overhead even when a particular allocation makes it appear loss-making. Consider avoidable costs and capacity before discontinuing it solely on an allocated profit figure.

Try the numbers yourself

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