Calculate true Shopify store net profit after transaction fees, COGS, advertising, and monthly app overhead. Know your real margins before scaling.
Advertisement
Monthly Revenue$12,500
$500$250K$500K
Cost of Goods Sold (% of Revenue)35%
5%40%80%
Ad Spend (% of Revenue)18%
0%30%60%
Shopify Plan
Monthly Apps + Fixed Overhead$180
$0$500$1K
Monthly Net Profit
$3,672
after all Shopify costs and expenses
Net margin: 29.4% · ROAS: 5.6x · Platform fees: $401
29.4%
Net Margin
5.6x
ROAS
$44,064
Annual Profit
$401
Shopify + CC Fees
Advertisement
What Actually Eats Your Shopify Margins
Most Shopify owners look at gross margin (revenue minus COGS) and feel good. The real picture includes four more layers: Shopify plan fees, payment processing (2.4-2.9% + $0.30 per transaction), third-party apps (the average store uses 6-10 paid apps at $50-$300/month combined), and advertising spend. At 35% COGS plus 18% ad spend plus 5% total platform fees plus 1.5% apps, you have 59.5% in costs — a 40.5% gross that nets down to 29-33% after overhead.
The highest-margin Shopify stores share one trait: strong organic traffic. Stores generating 50%+ of revenue from SEO, email, or word-of-mouth instead of paid ads consistently see 35-55% net margins. Building those channels takes 12-24 months but transforms the economics permanently. Every 10% shift from paid to organic traffic at $12,500/month revenue adds roughly $225 in monthly profit.
What is a good Shopify store profit margin?
20-35% net margin is solid for a store with mixed traffic sources. Under 15% is fragile and any cost increase could cause losses. Above 40% is excellent, typically requiring digital products, high average order value above $150, or dominant organic traffic cutting ad dependency.
How much does Shopify take from each sale?
With Shopify Payments on Basic plan: 2.9% + $0.30 per transaction. On a $50 order: $1.75 in fees (3.5% effective rate). With third-party gateways: add the 2% transaction fee on top. Shopify Payments is always cheaper if available in your country.
What Shopify apps are worth paying for?
High-ROI apps: email marketing (Klaviyo $20-$150/month), product reviews (Judge.me $15/month), post-purchase upsell (ReConvert $30/month). Cancel any app you have not actively used in 30 days. App bloat costs $200-$400/month at most stores with no corresponding revenue lift.
How do I calculate my Shopify break-even ROAS?
Break-even ROAS = 1 divided by (ad spend as a percentage of revenue). If you target 18% of revenue on ads, break-even ROAS = 1/0.18 = 5.6x. Any campaign above 5.6x is profitable at your target margin; below that you are eroding profit. Use this number to set campaign targets in Meta and Google Ads.