How do I work out true profit on each product after fees, shipping and ads?

The formula

For one unit sold on one channel:

Profit per unit = selling price, minus product cost, minus packaging, minus shipping you pay, minus channel fees, minus payment fees, minus ad cost per order, minus returns allowance

Profit margin is that profit divided by the selling price. Each piece matters, and most people forget at least two. Here is what goes in each.

• Product cost (COGS, cost of goods sold): what you paid to buy or make the unit, including freight and duty to get it to you.
• Packaging and labour: boxes, tape, inserts, and the pick and pack time if you pay for it.
• Shipping you pay: the label cost, minus anything the customer paid you for shipping.
• Channel fees: what the marketplace takes. These differ by channel (see below).
• Payment fees: the card processing cut on your own store.
• Ad cost per order: total ad spend on that product divided by orders it brought in.
• Returns allowance: the share of orders sent back, times what each return costs you.

What each channel takes

As of November 2026, here is what to look for on the fee pages of two big marketplaces.

• Amazon (the marketplace) charges a referral fee, a percentage of the sale price that depends on the product category, with a minimum per item. Its pricing page lists, for example, 15% for Home and Kitchen with a $0.30 minimum. The Professional selling plan is $39.99 a month. If you use FBA (Fulfilled by Amazon, where Amazon stores and ships your stock), fulfilment and storage fees come on top.
• Etsy (a marketplace for handmade and vintage goods) charges $0.20 to list an item (or renew a listing). On top of that come a transaction fee of 6.5% of the item price plus shipping and gift wrapping, a payment processing fee that varies by country, and an advertising fee on orders that Etsy's Offsite Ads bring in. That ad fee is 15% of the order, or 12% once your shop has made $10,000 in sales over the prior 365 days, and it is capped at $100 per order (Etsy's fees policy, as of November 2026). Etsy changes these rates from time to time, so check its fees page before you rely on them. The example below uses 6.5% and 15% plus an assumed payment fee.
• Your own Shopify store (Shopify is an online store platform) has no marketplace cut, but you pay card processing on every order and your monthly Shopify plan. Check the card rate on your plan's page.

A worked example with made-up figures

I will use one candle selling for $28 on three channels with free shipping to the customer. All figures here are made up for the example. Product cost is $6.00 and packaging $0.80. The shipping label costs $5.50 when I ship it myself. I assume a card rate of 2.9% plus $0.30 on my store, a $4.00 ad cost per order on my store and on Amazon, and a returns allowance of 3% of price ($0.84).

Line	Own store	Etsy	Amazon (FBA)
Price	$28.00	$28.00	$28.00
Product plus packaging	-$6.80	-$6.80	-$6.80
Shipping or FBA fee	-$5.50	-$5.50	-$4.50 (example FBA fee) and -$0.15 storage
Channel fee	none	-$1.82 (assumed 6.5%) and -$0.20 listing	-$4.20 (15% example category)
Payment fee	-$1.11	-$1.09 (example 3% plus $0.25)	included
Ads	-$4.00	$0 (or -$4.20 if Offsite Ads, assumed 15%)	-$4.00
Returns allowance	-$0.84	-$0.84	-$0.84
Profit per unit	$9.75 (34.8%)	$11.75 (42.0%), or $7.55 with Offsite Ads	$7.51 (26.8%)

The same candle earns $11.75 on Etsy with no ads, $9.75 on the store and $7.51 on Amazon. That is why I never trust one blended margin for a product.

Step by step

1. List your products. One row per product per channel, with SKU (your stock code) in the first column.
2. Fill in product cost from your last supplier invoice, including freight and duty. Update when costs change.
3. Add packaging and pick-pack cost as a flat amount per unit.
4. Add shipping you actually paid, averaged over the last 30 orders for that product. Use the real labels, not a guess.
5. Add channel and payment fees as percentages plus fixed amounts, from each channel's fee page.
6. Add ad cost per order: spend on the product divided by orders it produced.
7. Add a returns allowance: return rate times (lost margin plus return shipping).
8. Subtract, divide, sort. Sort by profit per unit from lowest. The bottom of the list is where decisions are.

A spreadsheet layout that works

Columns, left to right: SKU, product name, channel, price, product cost, packaging, shipping paid, channel fee %, channel fixed fee, payment fee %, payment fixed fee, ad cost per order, return rate, return cost, profit per unit, margin. Put the fee rates in one small table on a second tab, and look them up with a formula, so a fee change updates every row. Add one more column, units sold last month, and multiply to see total profit per product. This matters because a $2 profit on 1,000 units beats a $15 profit on 20.

Why is profit per product low or negative?

Yes, it can be negative, and it often is without people noticing. The usual causes:

• Ad cost spread on thin margins. A $4 ad cost on a $10 profit is fine. On a $3 profit it is a loss.
• Free shipping on heavy items. A label that costs more than expected eats the whole margin.
• Discount codes and sales. A 20% off promotion often cuts profit by half.
• Returns, especially apparel and electronics, where you lose the sale and the shipping both ways.
• Stale cost data. Your supplier raised the price in March and the sheet still has last year's.

When a product loses money on one channel and earns on another, move your ad spend and stock to the channel that pays. If it loses everywhere, raise the price, shrink the package, or drop it. For the Amazon-only version of this maths, see my Amazon seller profit calculator guide and Amazon seller profit margin guide.

Tools that do it for you

Profit apps such as BeProfit, TrueProfit and Lifetimely pull costs and fees automatically for Shopify stores. I compare them in BeProfit vs TrueProfit vs Lifetimely. A simple KPI dashboard can also show margin by product once the numbers are clean. If your costs live in several places, my guide to a multichannel inventory spreadsheet shows how to keep the source data tidy.

How I'd approach this

I would build the sheet for your top 10 products first, by revenue. Check each one against one real order from each channel, and see if your sheet matches the payout the channel paid you. Fix the gap before adding more rows. Past about 50 products or three channels, the monthly chore of updating costs and fees gets dull, and errors creep in. At that point I build a small report that pulls orders, fees and costs from each channel on a schedule, and shows profit per product per channel without anyone touching a sheet. That is what Blur Studio does for stores that have outgrown the spreadsheet. If you only sell a few products, the spreadsheet is enough, and I would keep it.