MarginReality

Shopify Shipping Margin Calculator

See exactly how shipping costs affect your per-order profit and monthly bottom line.

Inputs
$45
$18
$6
$5
200
Per-Order Breakdown
Product Price$45
Product Cost-$18
Net Shipping Cost-$1
Profit per Order$26
Margin per Order57.8%
Monthly Shipping Cost$1,200
Monthly Shipping Revenue$1,000
Monthly Shipping Gap-$200
Monthly Profit$5,200

How It Works

Shipping is one of the most underestimated costs in e-commerce. You charge the customer one price, but pay another. The gap between them silently eats your margins every single order.

Profit per Order = Product Price - Product Cost - (Shipping Cost - Shipping Charged)

Example

A product priced at $45 with $18 COGS, $6 actual shipping, $5 charged to customer, 200 orders/month:

  • Gross Profit per Order: $27 ($45 - $18)
  • Net Shipping Cost: $1 ($6 - $5)
  • Net Profit per Order: $26 (57.8% margin)
  • Monthly Shipping Gap: -$200 (subsidizing shipping)
  • Monthly Profit: $5,200

Frequently Asked Questions

How do shipping costs affect my Shopify profit?

Shipping costs reduce your per-order profit directly. If you charge $5 shipping but it costs you $8, you lose $3 per order. At 200 orders/month that's $600/month in hidden shipping losses.

Should I offer free shipping on my Shopify store?

Free shipping can increase conversion rates, but you must absorb the cost into your product price. Use this calculator to see if your margins can handle it. A common strategy is to raise product prices by the average shipping cost.

What is the average shipping cost for Shopify stores?

USPS Priority Mail averages $7-10 for small packages. UPS Ground and FedEx Ground range from $8-15 depending on weight and zone. International shipping can be $20-50+.

How do I calculate shipping margin per order?

Shipping margin per order = Product Price - Product Cost - Net Shipping Cost. If you charge $5 shipping but it costs $8, your net shipping cost is $3 per order.

What is the shipping gap?

The shipping gap is the difference between what you charge customers for shipping and what you actually pay. A positive gap means you make money on shipping; a negative gap means you subsidize it.

How can I reduce shipping costs on Shopify?

Negotiate carrier rates, use Shopify Shipping for discounted labels, optimize package sizes, consider flat-rate boxes, and consolidate orders when possible. Shopify Shipping offers up to 88% off USPS rates.