Should I include my own labor in product profit?

No. Per-unit profit captures variable costs that scale with each sale. Your own time is a fixed cost until you hire. If you want a fully-loaded number, calculate per-unit profit first, then subtract your time allocation from total profit after volume is known. Keep the two layers separate.

What about returns and refunds?

Returns eat directly into net profit. Multiply your per-unit profit by (1 minus return rate) for a real-world number. A 10 percent return rate on a $12 profit SKU means your effective profit is $10.80 per sale. Apparel and size-sensitive categories should always do this adjustment.

Why does shipping cost so much of my profit?

Shipping is the silent margin killer. A $7 shipping cost on a $40 AOV is 17.5 percent of revenue gone before anything else. Options: raise AOV with bundles, charge shipping to the customer, renegotiate 3PL rates at 300+ orders per month, or switch to a zone-optimized carrier like OSM or regional parcel.

Do I calculate profit before or after ads?

Before. Per-unit profit excludes advertising. It tells you the maximum CAC you can pay and still be first-order profitable. Subtract your target CAC from per-unit profit to see your true net-after-ads contribution. That is the number that pays fixed costs and funds reinvestment.

Profit & Pricing · Free Tool

Product Profit Calculator

Per-unit profit is the cleanest product decision metric you have. Strip out every cost tied to the sale and whatever is left is what that SKU earns you.

Net Profit = Price − COGS − Shipping − Fees − Other Costs

Selling price ($)

COGS (landed) ($)

Shipping cost ($)

Payment + transaction fees (%)

Other per-unit costs ($)

From MagicFit

Protect profit with ads that convert at full price

Discount-driven sales kill per-unit profit. MagicFit generates creative that sells on value so you can stop leaning on promos to hit revenue.

Try MagicFit Free →

How to use this Product Profit Calculator

Per-unit profit is the line you need before you set ad budgets, run discounts, or approve new SKUs. Gross margin ignores shipping and fees. Net margin mixes in fixed costs. Per-unit profit sits in between: it strips every variable cost attached to the sale and leaves the number that actually hits your bank.

Three costs founders routinely miss: payment processing (usually 2.9 to 3.5 percent plus fixed fees), pick and pack (typical 3PL charges $2 to $5 per order), and per-order software fees (fulfillment apps, insurance, inserts). Add them up and you are often $3 to $6 short of where you thought you were. Run this calculator for every SKU, not just averages. Product mix hides the truth.

Use the break-even price as your price floor. Anything below it is money-losing before fixed costs. That is the line below which a BFCM discount or a wholesale deal makes you poorer, not richer.

Frequently Asked Questions

Most scalable DTC brands run 30 to 50 percent per-unit profit margin after COGS, shipping, and fees. Below 20 percent leaves no room for paid acquisition. Above 50 percent is usually premium pricing power or direct sourcing. The right target depends on whether you are counting on repeat purchases or first-order profitability.

This Is What Winning Ads Look Like

Video and static creatives built for performance, across every format, style, and platform.

Workout Haul

UGC · Apparel

Glow Routine

UGC · Skincare

First-Sip Review

UGC · Beverage

40,000+

brands using MagicFit

4.2×

average ROAS lift

510%

engagement increase

85%

time saved on content

Powering creatives for fast-growing brands worldwide

True ClassicVape SuperstoreRoad iDAlphaFitSolaraForteKovaDRVN

Scale the SKUs that actually make money.

Join 40,000+ brands creating scroll-stopping content in minutes.

Start with Free Credits

No credit card required · 40,000+ brands inside