Question 1

What is a good profit margin for ecommerce?

Accepted Answer

A healthy ecommerce net profit margin is typically 15-20% after all costs including COGS, shipping, platform fees, payment processing, returns, and marketing. Margins above 30% are considered strong, while below 10% signals potential pricing or cost issues.

Question 2

How do you calculate true ecommerce profit margin?

Accepted Answer

True profit margin = (Selling Price - COGS - Shipping - Packaging - Platform Fees - Payment Fees - Returns Cost - Marketing Cost) / Selling Price × 100. Many sellers only calculate gross margin (price minus COGS), which overstates profitability by 15-25%.

Question 3

What costs should be included in ecommerce margin calculations?

Accepted Answer

Include cost of goods sold (COGS), shipping and packaging, platform fees (Shopify, Amazon, etc.), payment processing (Stripe, PayPal), return costs (typically 5-15% of revenue), and customer acquisition/marketing costs per unit.

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