Shopify profit margin calculator: your margin at what each unit really cost

Updated 4 November 2026 · By Senoussi, developer of True COGS at Nexus Logic Systems

Short answer

Profit margin = (price after discount − cost) ÷ price after discount × 100. Shopify's profit reports use the Cost per item recorded when each order was placed. If freight and duty are not in that cost, or the cost is older than your last delivery, the margin they show is too high. Example: a $40.00 sale with a $16.00 Cost per item is a 60% margin in Shopify; with $2.40 of freight and duty per unit it is 54%; after a 3% + $0.30 card fee, 50.25% is left.

The calculator

Enter one product. The fee fields are examples: use the rate on your own plan and payment provider.

Selling price per unit ($)

Discount (%)

Cost per item in Shopify ($)

Freight and duty per unit ($)

Payment fee (%)

Payment fee per order ($)

Units per order

Shipping you pay per order, less what the customer paid ($)

Target margin (%)

The formulas

Net price            = price × (1 − discount)
Gross margin %       = (net price − cost) ÷ net price × 100
Markup %             = (net price − cost) ÷ cost × 100
Price for a margin   = cost ÷ (1 − target margin)
After fees           = net price − cost − fee % × net price − fixed fees per unit

Margin is measured on the price; markup on the cost. The same $20 of profit on a $40 sale is a 50% margin and a 100% markup.

Margin and markup are two views of the same profit.
Margin	Markup
20%	25%
25%	33.33%
40%	66.67%
50%	100%
60%	150%

A worked example

One unit, one order; checked to the cent.
Line	Amount	Margin
Selling price	$40.00
− Cost per item in Shopify	$16.00	60.00%
− Freight and duty per unit	$2.40	54.00%
− Card fee, 3% + $0.30 (example rate)	$1.50
= Left per unit	$20.10	50.25%
Same sale with a 25% discount ($30.00)		46.67% in Shopify, 38.67% at landed cost

To keep a 50% margin at the landed cost of $18.40, the price must be at least $36.80; to keep 50% after the example fee, $39.79.

What Shopify's profit report counts

Net sales and the recorded cost. Shopify works out gross margin from net sales and cost; its own example is $50 of net sales and $30 of cost, a 40% margin (Shopify Help).
Discounts and refunds lower net sales, so the margin in the report can differ from the one on the product page.
Only variants that had a cost when they sold are reported. A variant with no Cost per item at the time of sale is left out of profit.
No payment fees, shipping or ads. Gross margin stops at the cost of the goods; what is left after fees is a separate figure, shown in the calculator.

Why the margin in Shopify is often too high

Each variant has one Cost per item, and Shopify Help is plain about receiving stock: “This cost stays fixed when you receive a purchase order or transfer.” (Shopify Help). Two things follow:

Price rises don't reach the report. If the supplier charged $17.50 on the last delivery and Cost per item still says $16.00, every sale is reported $1.50 too profitable.
Freight and duty are missing unless you add them to Cost per item yourself. Inbound freight and import duty are part of the cost of the goods (is freight part of COGS?). Use the landed cost calculator to get the per-unit figure.

How True COGS helps

It records the price paid on each delivery and keeps Cost per item at your weighted average, or FIFO on a paid plan, so Shopify's own profit report uses the cost you really paid.
On paid plans each delivery's freight and duty are split into the units' cost.
Its Profit page shows gross profit and margin at that cost, on every plan.

Questions merchants ask

How do I calculate profit margin on Shopify?

Take the price after any discount, subtract the cost of the unit, divide by the price after discount, and multiply by 100. A $40.00 sale with an $18.40 landed cost is a 54% margin.

Does Shopify show profit margin?

Yes. Shopify's profit reports show gross profit and gross margin by product and variant, from net sales and the Cost per item recorded when each order was placed. Variants with no cost at the time of sale are left out.

Is profit margin the same as markup?

No. Margin divides the profit by the price; markup divides it by the cost. $20 of profit on a $40 sale is a 50% margin and a 100% markup.

Should freight and duty be in Cost per item?

Inbound freight and import duty are part of what the goods cost you, so leaving them out makes the margin look higher than it is. Shipping orders to customers is a selling cost, not part of the goods' cost.

Why is my Shopify margin higher than what I keep?

Gross margin leaves out payment fees, shipping and ads, and Shopify's Cost per item stays fixed when new stock arrives. If supplier prices went up, the report still uses the old cost.

Can I include Shopify fees in the margin?

Yes. Enter the payment fee percentage and the fixed fee per order from your own plan and payment provider, and the calculator shows what is left per unit after fees. Rates differ by plan, country and payment method, so the fields hold examples only.

Try True COGS free. True COGS is an inventory costing app for Shopify by Nexus Logic Systems. It records the price you paid on every delivery (a received purchase order or a transfer), with its share of freight and duty on paid plans, keeps every price with its date, and writes your moving weighted average cost, or FIFO cost on a paid plan, to Shopify's Cost per item. It is free for up to 25 variants with a cost on record; paid plans start at $29 a month or $290 a year.

Install from the App Store