Profit Calculator

Who should use Profit Calculator

• Marketplace sellers on Amazon, Flipkart, Meesho, Myntra or Nykaa comparing per-SKU profitability
• D2C brands on Shopify or WooCommerce deciding whether a discount campaign is survivable
• Anyone setting a launch price and needing a floor below which the SKU loses money

How to use it, step by step

1. Enter the price the customer pays, including GST, exactly as it appears on the listing.
2. Enter your landed product cost: supplier invoice plus inbound freight plus packaging.
3. Enter the marketplace commission percentage from your category fee schedule, not an average.
4. Add fixed per-order costs: shipping or fulfilment fee, closing fee, payment gateway charge.
5. Add your allocated ad spend per order (total campaign spend divided by orders attributed).
6. Read net profit and margin, then repeat for your worst-case return rate.

How net profit per order is calculated

Commission is applied to the gross selling price before anything else is deducted. Fixed fees are then subtracted as flat amounts, and product cost and advertising come out last. Margin is expressed against the selling price, because that is the number your revenue reports use.

Commission = Selling price x Commission %
Net profit = Selling price - Commission - Fixed fees - Product cost - Ad cost
Margin % = Net profit / Selling price x 100

Worked example: a Rs 899 kitchen SKU

• Selling price: Rs 899
• Commission at 15%: Rs 134.85
• Shipping + closing fee: Rs 85
• Landed product cost: Rs 420
• Ad cost per order: Rs 70
• Net profit: 899 - 134.85 - 85 - 420 - 70 = Rs 189.15
• Margin: 189.15 / 899 = 21.0%

A 21% margin looks healthy until you apply a 12% return rate: roughly one in eight orders returns and you still pay forward and reverse shipping on it. Re-run the calculation with the returned orders' costs spread across the successful ones before you commit to the price.

Common mistakes to avoid

• Using a blended commission rate instead of the exact category rate for that SKU.
• Forgetting the payment gateway or closing fee, which is flat and hurts low-ticket items most.
• Excluding returns entirely — returns are the single largest hidden cost for apparel and footwear.
• Counting GST collected as revenue: it is not yours, it passes through to the government.
• Allocating ad spend to total orders rather than to the orders the campaign actually produced.

How to read the result

If margin after returns falls below roughly 10%, the SKU cannot absorb a price war, a fee revision or a slow month. Either negotiate landed cost down, raise price, bundle to lift average order value, or stop advertising that SKU and let it run on organic demand only.

Frequently asked questions