1. Retail Price & Product Cost (COGS)
Core NumbersFinal price charged to customer
Unit cost from supplier/factory (AliExpress/CJ)
2. Shipping & Delivery (Fulfillment)
Per orderWhat you pay the shipping carrier
Enter 0 if offering Free Shipping
3. Paid Advertising (Marketing & CPA)
Average ad spend on Meta/TikTok to make 1 sale
e.g., 3.0x means $1 ad spend generates $3 sales
4. Payment Fees & Returns (COD)
Stripe, PayPal, etc. (typically 2.9% - 3.5%)
Fixed per-transaction fee (typically $0.30)
Critical for COD (typically 15% - 25% in cash markets)
Boxes, thank you cards, and warehouse handling
Monthly Sales Simulation:
How many completed orders per month?
⚖️ Product Comparison (Product A vs B)
Save your current numbers as Product A, then adjust inputs to see which product delivers higher profit and lower ad risk.
| Metric | Product A | Product B (Current) | Winner |
|---|---|---|---|
| Selling Price | - | - | - |
| Net Profit / Order | - | - | - |
| Net Margin % | - | - | - |
| Break-Even ROAS | - | - | - |
| Max Allowable CPA | - | - | - |
🎯 Golden Ad Metrics
Never run ads at a lossMinimum ROAS needed to avoid losing money
If your ad CPA exceeds this, you lose money
📊 Order Revenue Breakdown
Complete Guide: How to Calculate E-Commerce Margins & Break-Even ROAS
Stop guessing your ad profitability. Master the core financial equations that differentiate scaling 7-figure stores from unprofitable dropshippers.
Healthy e-commerce brands maintain a net margin of 20% to 35% after all ad spend and fulfillment fees.
Your campaign's minimum return on ad spend. Any live ad running below this target is actively losing money.
The exact ceiling your media buyer can spend on Meta or TikTok to acquire one customer at $0 profit.
Why Most E-Commerce Stores Lose Money on Paid Ads
Beginner merchants often celebrate a 2.5x ROAS in their Facebook Ads Manager or TikTok Ads dashboard, only to discover an empty bank account at the end of the month. This happens because platform dashboards only track revenue against ad spend, completely ignoring product sourcing costs (COGS), warehouse handling, payment processing fees (Stripe/PayPal), and customer returns.
The Hidden Factor: Cash on Delivery (COD) Return Losses
In high-volume cash-on-delivery regions such as the Gulf (Saudi Arabia, UAE) and North Africa, refused shipments and Return to Origin (RTO) rates typically hover between 15% and 25%. When a customer rejects a package, the merchant still pays the courier shipping fee, packaging cost, and return shipping fee. Our calculator factors this RTO loss directly into your cost structure so your margins reflect reality.
Frequently Asked Questions (FAQ)
What is considered a healthy dropshipping net margin?
A net margin above 25% is great. A margin between 15% and 25% is sustainable if order volume is high. Below 15%, sudden ad cost spikes or returned packages can make the store unprofitable.
How can I quickly improve my Break-Even ROAS?
You can improve your ROAS target by negotiating supplier volume discounts, introducing post-purchase upsells or bundle packages (increasing AOV), and using lower-fee payment processors.
Does this calculator work for TikTok Shop and Amazon?
Yes! For TikTok Shop or Amazon FBM, enter the marketplace referral commission (typically 5% to 15%) into the Payment Gateway Fee input and set courier costs accordingly.
Why is Break-Even ROAS lower when product cost is low?
Because higher gross profit per unit leaves a wider financial buffer for advertising. For high-margin items, you can afford a lower ROAS (e.g., 1.5x) and still generate healthy net cash flow.