Revenue is easy to know to the cent. What one order leaves after the costs of making the sale is much harder to see. That gap matters, because pricing, ad budgets and discount decisions are all made per order, and a margin that looks healthy at the product level can shrink to very little once shipping, payment fees, advertising and refunds are counted.
This guide shows how to calculate profit margin per order the way the free ORVX Profit Margin Calculator does it: which numbers go in, what each result means, a worked example, and the mistakes that make a margin look better than it is.
Every example and amount on this page is illustrative. It shows the method and is not a benchmark, a quote or advice.
Three numbers that are easy to confuse
Gross margin, markup and profit per order all describe the same sale from different angles. They are often mixed up, and the mix-up usually flatters the business.
- Gross profit is the selling price minus what the product cost you.
- Gross margin is gross profit divided by the selling price. It answers "what share of the price is left after the product itself?"
- Markup is gross profit divided by the product cost. It answers "how much did I add on top of cost?" Markup is always a larger percentage than margin for the same sale, which is why quoting it by mistake makes a business look more profitable.
- Profit per order subtracts every variable cost of the sale, not only the product: shipping and fulfilment, payment fees, the ad cost of winning the order, and the refunds you expect.
- Net margin per order is profit per order divided by the selling price.
Gross margin is useful for comparing products. Profit per order is the number that tells you whether selling more of something actually helps.
The formula the calculator uses
The calculator applies one formula, shown on the page with every result:
Profit per order = price - product cost - shipping - (price x fee % + fixed fee) - ad cost - (price x refund rate)
Net margin is then profit per order divided by price. Each input maps to something you can look up:
- Selling price: what the customer pays for the item, before tax.
- Product cost: what you paid for the unit, including inbound freight if you track it.
- Shipping and fulfilment: postage, packaging and pick and pack for one order.
- Payment fee: your processor's percentage plus its fixed fee per transaction.
- Ad cost per order: ad spend divided by the orders it produced. If you only know your ROAS, divide the price by the ROAS.
- Refund rate: the share of revenue you usually give back.
Worked example: one order, two ad costs
As an illustration only, suppose a store sells a product for $60. The unit cost is $22, shipping and packing cost $6, the payment processor charges 2.9% plus $0.30, the ad cost per order is $9, and the store refunds about 4% of revenue. Here is what the calculator returns.
| Line | Amount |
|---|---|
| Selling price | $60.00 |
| Product cost | -$22.00 |
| Shipping and fulfilment | -$6.00 |
| Payment fees ($60 x 2.9% + $0.30) | -$2.04 |
| Ad cost per order | -$9.00 |
| Expected refunds ($60 x 4%) | -$2.40 |
| Profit per order | $18.56 |
In this example gross profit is $60 - $22 = $38, so the gross margin is $38 / $60 = 63.33% and the markup on cost is $38 / $22 = 172.73%. The profit per order after costs is $18.56, which gives a net margin of $18.56 / $60 = 30.93%.
Now say the same product is pushed harder and the ad cost per order doubles to $18. Nothing else changes, so profit per order drops by exactly $9 to $9.56, and the net margin falls to $9.56 / $60 = 15.93%. The gross margin is still 63.33%. That is the whole point of the exercise: the number most dashboards show did not move, while the money each order leaves was cut almost in half.
How to use the calculator in practice
- Pick one product and use its real selling price, not the compare-at price.
- Take the unit cost from your supplier invoice. If you pay freight to receive stock, add your share per unit.
- Use the average shipping and packing cost of an order containing this product.
- Enter your payment processor's published rate for your plan.
- For ad cost, divide last month's spend on the product's campaigns by the orders they produced.
- Use the refund rate from your own order history, not a guess.
- Read profit per order first, then net margin. Change one input at a time to see which cost matters most.
Try the price you charge today, then the price with your usual discount. If the discounted order is close to zero, the promotion is spending margin you do not have. The Product Pricing Calculator works the problem backwards and gives the price that reaches a target margin.
Common mistakes
- Quoting markup as margin. A 100% markup is a 50% gross margin, not 100%.
- Leaving out fees. Payment fees apply to the full price, so they grow with every price increase.
- Using ROAS from the ad platform as profit. A sale the platform reports is revenue, and the ad cost still has to come out of it. The Break-Even ROAS Calculator shows the ROAS below which an ad-driven order loses money.
- Ignoring refunds. A refunded order still cost you shipping and often the ad that won it.
- Averaging across very different products. One low-margin best seller can hide inside a healthy store average.
For a deeper look at the two margins, read Gross Margin vs Net Margin in Ecommerce.
What the calculator cannot tell you
It is a model of one order, built from the numbers you type. It does not know your fixed costs such as rent, salaries or software, so a positive profit per order is not the same as a profitable month. It also treats the ad cost as fixed, while real ad costs move with budget, season and creative. And it assumes one item per order: a basket with several items shares one shipping cost and one payment fee, which usually improves the result.
Everything runs in your browser. Nothing you enter is sent anywhere or stored.
From one order to every order
The calculator is useful for a pricing decision. Running it by hand for every product every week is not realistic, and that is the job ORVX Core does: it reads your Shopify orders, product costs, refunds and ad spend from Meta and Google, and reports profit per order, product and collection with the same definitions used here.
Through the $1.9M Commerce Initiative, the first 10,000 eligible Shopify stores can use ORVX Core free for 12 months, with no credit card. After that, Core is the standard $19 per month or $190 per year, only if you choose to continue. Intelligence is not part of the offer. More free calculators and store checks are in the ORVX tools hub.
Frequently asked questions
What is a good profit margin per order?
There is no single right number. It depends on your category, your cost structure and how much of your growth is paid for with ads. Use the calculator to see your own figure, then compare it with the profit you need each month to cover fixed costs.
Is gross margin the same as profit margin?
No. Gross margin only subtracts the product cost. Profit per order also subtracts shipping, payment fees, advertising and expected refunds, so it is usually much lower.
Why does the calculator ask for a refund rate?
Refunds take back revenue you already counted. Spreading the expected refund cost across every order gives a more honest profit per order than ignoring it.
Does the calculator save what I type?
No. It runs in your browser. Nothing you enter is sent to ORVX or stored.
How is this different from what ORVX does?
The calculator checks one order with numbers you type. ORVX Core reads your Shopify orders, product costs, ad spend and refunds and reports profit for every order, product and day.
Sources
- The $1.9M Commerce Initiative: terms and FAQ (ORVX, checked 26 October 2026)