Profit calculator

How much profit is left
when every cost is paid?

Eight numbers from your webshop. The result shows up as you type, no sign-up, and every number comes with the discipline that moves it. It is the same calculation I run for my own webshops.

Your numbers, one typical month

Orders per month per month

Use the average of the last three months.

Average order value, ex. VAT kr.

Revenue divided by orders, without VAT.

Cost of goods, share of revenue %

What the products cost you, as a percentage of revenue ex. VAT.

Shipping and handling per order kr.

Carrier, packaging and pick-and-pack, per order.

Return rate %

Share of orders that come back. Fashion often sits at 20 to 40 percent, most other categories under 10.

Payment fees, share of revenue %

Card and PSP fees. Typically 1 to 3 percent.

Ad spend per month kr.

Google, Meta, TikTok and other paid channels together.

Fixed costs per month kr.

Salaries, rent, software, everything that does not change with an order.

Contribution margin 3 · per month

0 of revenue · 0 per order

Profit score

My own scale, not an industry statistic: 0 means contribution margin 3 at minus 10 percent of revenue, 100 means 25 percent or better.

Revenue

Contribution margin 1

Contribution margin 2

Profit after fixed costs

Break-even ROAS

ROAS · POAS

0 · 0

Contribution margin 1. Revenue after returns, minus the cost of the goods. Moved by pricing, assortment and how many parcels come back. Branding · Omnichannel
Contribution margin 2. After shipping, handling and payment fees. Moved by logistics, packaging and the flows that lift repeat purchases. Email marketing
Contribution margin 3. After advertising. This is the number I run Google Ads and Paid Social against, and the one SEO protects when ads get expensive. SEO · Google Ads · Paid Social
Break-even ROAS. The ROAS an ad needs to break even on contribution margin 3. Below it, every sale costs you money.
POAS. Profit on ad spend: contribution margin 2 per krone of advertising. A truer target than ROAS, because it knows your margins.

The three contribution margins, in plain words

Most webshops know their revenue and their ad spend. Far fewer know what is left after the goods, the parcels and the card fees have been paid. That gap is where profitable shops separate from busy ones. I have run both kinds.

Contribution margin 1 is revenue after returns, minus the cost of the goods you sold. It tells you whether your pricing and your assortment carry the business at all.

Contribution margin 2 subtracts everything it costs to get the order to the customer: shipping, packaging, pick and pack, payment fees. This is the margin a single order leaves behind, and the number POAS is built on.

Contribution margin 3 subtracts advertising. When it is positive, growth pays for itself. When it is negative, every campaign is bought with money from somewhere else, and the shop grows poorer while it grows bigger.

Break-even ROAS and POAS

Break-even ROAS is the return an ad needs before it stops losing money on contribution margin 3. The calculator derives it from your own margins: one divided by the share of revenue that survives as contribution margin 2. A shop with thin margins needs a high ROAS; a shop with strong margins can profit at a ROAS that would look mediocre elsewhere.

POAS, profit on ad spend, replaces revenue with contribution margin in the same ratio. It is the target I set in Google Ads and Paid Social, because it is the only advertising number that already knows what your products cost.

What moves each number

Cost of goods and returns are questions of brand, pricing and product information: the clearer the promise, the fewer parcels come back. Shipping and handling are logistics and omnichannel decisions. Repeat purchases, which lift every margin without new ad spend, are what email marketing is for. And SEO is the channel that keeps selling when the ad auction gets expensive. This is the whole idea behind Profit Engineering: six disciplines, one number.

The profit score at the top is my own scale for reading contribution margin 3 as a share of revenue. It is not an industry benchmark, and I do not pretend it is. It exists so two calculations can be compared at a glance.

FAQ

Ofte stillede spørgsmål

What is the difference between contribution margin 1, 2 and 3?

Contribution margin 1 is revenue minus the cost of the goods you sold. Contribution margin 2 also subtracts the variable costs of getting the order out the door: shipping, handling and payment fees. Contribution margin 3 subtracts advertising as well. It is the number that tells you whether growth is paying for itself.

Why do you calculate with revenue ex. VAT?

VAT is never yours. If you count it as revenue, every margin looks better than it is, and your break-even ROAS looks lower than it is. Take the ex. VAT numbers from your accounting or your shop platform.

What is a good break-even ROAS?

There is no universal number, because it depends entirely on your margins. A shop with 60 percent cost of goods and expensive shipping may need a ROAS of 4 just to break even, while a shop with 30 percent cost of goods can profit at 2. That is exactly why I prefer POAS as the target.

What is POAS, and why not just ROAS?

POAS is profit on ad spend: contribution margin per krone of advertising. ROAS only compares revenue with ad spend and ignores what the products and the shipping cost you. Two campaigns with the same ROAS can have wildly different POAS. I optimise Google Ads and Paid Social against POAS, because it is the number that ends up on the bottom line.

Where do the numbers go when I ask for the PDF?

Your email and the calculation are stored in my Klaviyo account so I can send you the PDF. I do not add you to a newsletter unless you sign up for one. You can share a calculation without giving me anything at all: the link carries the numbers.

Want to read your numbers together?

Book 30 minutes. Bring the calculation, and I will show you which of the six disciplines would move it most.

See Profit Studio