Costs · Margins · The business of ecommerce
Forget the spreadsheet templates with 40 tabs. Unit economics is one question: after one order pays its own bills, what is left? Here is the math on a single $60 order, every line explained.
Most “unit economics” explainers start with LTV:CAC ratios and cohort curves, which is like teaching someone to swim by starting with the ocean. The whole subject is one question: when a customer pays you $60, how much of it is still yours after that specific order pays its own bills? Answer that honestly and every other decision (ad budgets, plan upgrades, whether the business works at all) becomes arithmetic. So let us answer it, with a worked model where every number is either from a published source or labeled as the assumption it is.
Contribution per order = AOV minus (product cost + shipping + packaging + payment processing + marketing per order).
Everything that scales with an order goes above the line. Everything that stays the same whether you sell 10 or 300 orders (Shopify subscription, apps, your salary ambitions) waits below it. Mixing the two is the most common spreadsheet mistake and the reason so many stores discover their “profitable” ads were eating fixed-cost money.
Our model store sells a $60 average order. Here is where that $60 goes, line by line.
Product cost: $27.00 (45% of the order). An assumption, but a defensible one: NYU Stern’s January 2026 sector data puts retail gross margins between 26% and 57% depending on category, and Shopify’s own guidance says 30% to 50% gross is normal. A 55% gross margin (45% COGS) sits in the middle. Your supplier invoice replaces this number in five seconds.
Shipping: $6.00. Assumption. Domestic US labels for a small parcel commonly land in the $5 to $9 range depending on zone and weight; we picked the low-middle. If you charge the customer for shipping, this line shrinks by whatever they pay.
Packaging: $1.00. Assumption: a box, filler and tape. Trivial per unit, never zero.
Payment processing: $2.04. Published: 2.9% + 30 cents on Shopify Basic with Shopify Payments (US online rate), so $1.74 + $0.30 on a $60 order. We took apart this line in detail in Shopify fees per sale.
Marketing: $12.00. The swing line, and worth a paragraph. IRP Commerce’s live dataset measured a 2.03% ecommerce conversion rate in June 2026, which means about 49 visits per order, and an average traffic cost of £0.16 per session for its (established, mostly UK) merchants, which works out to roughly £7.88 of marketing per order, about 6% of their £127 average order. A new store buys colder traffic with a worse conversion rate, so we assume $12 per order, 20% of AOV. That is a deliberate handicap, not a measurement; put your own blended number in below.
Total per-order costs: $48.04. Contribution: $11.96 per order, or 19.9% of the order value. That is the store’s real earning rate. Not the 55% gross margin, and certainly not the $60 of “revenue”.
Contribution exists to pay the bills that do not scale. Keep that stack lean and the math turns friendly fast. A minimal serious setup runs about $59/month: Shopify Basic at $29 (annual billing) plus roughly $30 of apps, which is where lean stores in our app stack pricing survey start.
At $11.96 contribution per order:
Notice what did not matter much: the difference between Shopify’s $29 and $39 billing options moves the break-even by less than one order. The lines that matter are all inside the order. We covered the full fixed-cost stack, including the ones people forget, in how much a Shopify store really costs.
Every input below is one of the model’s assumptions. Replace them with your real figures and the calculator recomputes contribution, margin and break-evens.
1. Average order value. The 30-cent processing fee, the shipping label and the box cost the same on a $25 order and a $75 order, so every extra dollar of AOV arrives with above-average margin. This is why the boring advice (bundles, a free-shipping threshold slightly above your current AOV) keeps beating clever advice.
2. Marketing per order. In the model it is the largest controllable line, and it compounds through conversion rate: at IRP’s measured 2.03% conversion, one order costs 49 visits; at 3%, the same traffic buys a third more orders. Half your marketing line also disappears for every repeat purchase, since a returning customer arrives without a new CAC attached.
3. Product cost. Renegotiating from 45% to 40% of AOV adds $3 per order in the model, more than any processing-fee optimization could. Supplier calls are unglamorous and mathematically superior.
The lever that is mostly a distraction: payment processing. The gap between plans is 0.4 points of the order. It matters at volume (we mapped the exact crossover points in the fees per sale breakdown), but no store was ever saved by it.
Published and checkable: Shopify Basic at $29/month on annual billing and the 2.9% + 30 cents US online card rate (shopify.com/pricing, checked July 15, 2026); the 2.03% conversion rate, £127.06 average order value and £0.16 cost per session (IRP Commerce open market data, June 2026 figures, checked July 2026); retail sector gross margins of 26% to 57% (NYU Stern, data as of January 2026).
Assumed and labeled: 45% product cost, $6 shipping, $1 packaging, $12 marketing per order, $30/month of apps. These are model inputs chosen to sit inside the published ranges, not measurements. The calculator exists so you can overwrite all of them; the article's claims about which levers matter hold across any realistic set of inputs, because they follow from the structure (fixed cents per order versus percentage costs), not from our particular numbers.
It is the profit and loss of a single order. You take the average order value, subtract every cost that scales with the order (product cost, shipping, packaging, payment processing, the marketing spend that produced the order) and see what remains. That remainder, the contribution, is what pays your fixed costs and eventually you.
There is no published official standard, but the arithmetic sets bounds. Sector data puts retail gross margins between 30% and 57%, and shipping plus processing plus marketing typically absorb 25 to 40 points of that. Stores that keep 15 to 25% of the order value as contribution have room to grow; stores below 10% are usually financing their marketing with their own margin.
Work backwards from conversion. IRP Commerce's open dataset measured a 2.03% ecommerce conversion rate in June 2026, meaning roughly 49 visits per order. Multiply what a visit costs you (their measured average was £0.16) by 49 and you have a defensible starting estimate, then replace it with your own measured number as soon as you have one.
Because three of your five per-order costs are partly fixed in dollars, not percentages: the 30-cent payment fee, the shipping label and the box cost the same on a $25 order as on a $75 order. Raising AOV spreads those fixed dollars thinner, which is why bundles and free-shipping thresholds move margins more than most conversion tweaks.