Gross Margin Calculator
An interactive gross margin calculator built for Shopify, WooCommerce, and Magento operators — see your real gross margin and contribution margin after payment fees and fulfilment.
Gross Margin Calculator
A tool that calculates gross margin and contribution margin from revenue, landed COGS, payment fees, and fulfilment costs.
A gross margin calculator turns four order-level inputs — revenue, landed cost of goods sold, payment processing fees, and fulfilment costs — into the two numbers operators actually steer by: gross margin percentage and contribution margin percentage.
The version below is built for online stores on Shopify, WooCommerce, or Magento, where the textbook gross margin figure (Revenue − COGS) hides real money lost to Stripe/Shop Pay fees, pick-and-pack, and last-mile shipping. Separating the two views shows what your storefront earns before marketing spend — the ceiling on how much you can afford to pay for a customer.
Calculate your gross and contribution margin
Net revenue per order
$
Average order value after discounts and before tax.
Landed COGS per order
$
Product cost plus inbound freight and duties — the fully landed cost into your warehouse.
Payment processing fee
%
Blended rate across Shop Pay, Stripe, PayPal, Klarna. European DTC averages 2.2–3.0%.
Fulfilment + shipping per order
$
Pick, pack, packaging, and outbound shipping (net of any shipping revenue collected).
Gross margin %
70.7%
Contribution margin %
56.8%
Hidden cost gap (gross − contribution)
13.8%
Use a 30-day or 90-day blended AOV rather than a single order. If you discount heavily, run the calculator twice — once at list price and once at promo price — to see how much margin a campaign actually surrenders.
The gap between gross margin and contribution margin is the most underestimated number in DTC unit economics. A brand that reports a 70% gross margin to investors can be operating at 55% once Shop Pay fees and a heavy pick-and-pack process are netted out.
That delta is what determines how aggressively you can bid on Meta and Google. If you steer by gross margin alone, you will systematically overpay for traffic.
The formula behind the calculator
Contribution Margin % = (Revenue − COGS − (Revenue × Payment Fee %) − Fulfilment Cost) ÷ Revenue
Revenue
Net order revenue
Average order value after discounts, before tax and shipping revenue.
COGS
Landed cost of goods sold
Unit cost plus inbound freight, duties, and any per-unit packaging material.
Payment Fee %
Blended processing rate
Weighted average across Shop Pay, Stripe, PayPal, Klarna, and any local methods.
Fulfilment Cost
Per-order fulfilment + outbound shipping
Pick, pack, mailer, and last-mile carrier cost, net of customer-paid shipping.
A beauty brand on Shopify with a €60 AOV, €15 landed COGS, 2.8% blended payment fees, and €6 fulfilment.
Revenue: €60
COGS: €15
Payment Fee %: 2.8%
Fulfilment Cost: €6
→ Contribution margin = (60 − 15 − 1.68 − 6) ÷ 60 = 62.2%
Gross margin reads 75.0% but contribution margin is 62.2% — a 12.8 pp gap. The brand can afford a customer acquisition cost up to roughly €37 per first order before that order becomes unprofitable on a contribution basis.
Gross margin answers "how much does the product earn?" Contribution margin answers "how much do I have left to spend on growth?" Both matter — they just answer different questions.
What a healthy margin looks like by category
Typical gross and contribution margins for European DTC verticals, €1M–€15M revenue band
| Vertical | Gross margin | Contribution margin | Typical AOV |
|---|---|---|---|
| Apparel & accessories | 65–75% | 45–58% | €60–€95 |
| Beauty & skincare | 70–82% | 55–68% | €45–€75 |
| Supplements & food | 55–70% | 35–50% | €35–€60 |
| Home & decor | 50–62% | 30–42% | €80–€150 |
| Consumer electronics accessories | 40–55% | 22–35% | €40–€90 |
| Pet products | 45–60% | 28–42% | €35–€70 |
Beauty sits at the top because unit costs are low relative to perceived value and parcels are light. Electronics accessories live near the bottom because product cost is a larger share of revenue and returns eat margin.
How to use the result
Once you have a contribution margin number, multiply it by your AOV to get the maximum you can spend acquiring a first-order customer at break-even. From there, your target CAC sits below that figure — by how much depends on repeat purchase rate and the payback period you tolerate.
Run the calculator monthly. Payment mix shifts as Klarna or PayPal share rises, carrier rates change annually, and discount intensity moves your effective AOV — all of which silently compress contribution margin. Pair this with a clean read on COGS for DTC and a regular gross margin measurement cadence.
Three costs that quietly destroy DTC margin
Returns (a 12% return rate on apparel typically costs 4–6 pp of contribution margin once reverse-logistics and write-offs are counted). Free-shipping thresholds that customers game by ordering just over the line. And payment-method mix drift — Klarna and Afterpay typically cost 3.5–5.5% versus 1.5–2.0% for direct card. If your contribution margin slipped year-on-year without a price or supplier change, look here first.
Frequently asked questions
Gross margin only subtracts COGS from revenue. Contribution margin also subtracts variable per-order costs like payment fees and fulfilment. For an online store the contribution figure is the one that tells you how much you can spend on marketing.
No — net it against fulfilment cost instead. So if a customer pays €4.95 shipping and your real fulfilment cost is €8.50, enter €3.55 as fulfilment. This keeps revenue at the product-revenue level and gives you a cleaner margin read.
Pull your blended rate from the last 90 days of payouts. European Shopify stores typically land between 2.2% and 3.0% blended once Shop Pay, PayPal, Klarna, and any local methods are weighted. Use the actual number, not the headline Stripe rate.
Yes — enter the post-discount AOV as revenue. If you want to model the impact of a promo, run the calculator at list price and at the discounted price; the gap shows how many points of contribution margin the campaign costs you.
For most DTC verticals, 60–75% gross margin is the healthy band. Beauty and skincare often run higher (75–82%), while supplements, electronics accessories, and home goods typically run lower (45–60%). What matters more is the contribution margin after fulfilment.
Returns aren't in the calculator directly, but you can approximate by reducing revenue and increasing fulfilment cost by your return rate. A 10% return rate with a €4 reverse-logistics cost adds roughly €0.40 per order to fulfilment and reduces net revenue by the refund value of returned orders.
Per-order is the more useful view for marketing decisions, because that's the unit your ad platforms optimise against. Per-SKU is better for merchandising and pricing decisions. Run both — they answer different questions.
Monthly at minimum. Payment-method mix, carrier rates, packaging costs, and promo intensity all drift, and contribution margin can lose 3–5 percentage points over a year without anyone noticing. A quarterly deep-dive plus a monthly quick check works well.
For first orders, yes — use it as-is. For the full subscriber view, you'd also need churn-adjusted lifetime contribution, which is a separate calculation. Use this calculator to set the floor: if first-order contribution margin is negative, the subscription model has to do a lot of heavy lifting to recover.
Usually one of three reasons: payment fees are higher than the headline rate once Klarna and PayPal are mixed in, fulfilment cost per order has crept up with carrier rate increases, or your free-shipping threshold is too low and customers are clustering just above it. Run the numbers and check each in turn.
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