Profit Margin Calculator for Shopify

Redeemly is a Shopify app that replaces traditional discounts with store credit incentives. Instead of offering 10-15% off on first purchase to capture emails (which destroys your margins immediately), you offer 5% back in store credit. You keep 100% of your margin on the first sale, and the credit only becomes a cost when customers return for a second purchase. This transforms one-time discount-seekers into loyal repeat buyers while protecting your profitability.

Most Shopify stores offer 10-15% off to capture emails on first visit. This immediately reduces your revenue and margins before you even know if the customer will return. You're essentially paying 10-15% of your revenue to buy an email address. With Redeemly's store credit approach, you keep 100% of the margin upfront and only incur a cost when customers make a second purchase, making it far more profitable and effective at building repeat business.

Markup is the percentage added to your cost to determine the selling price, calculated as (Selling Price - Cost) ÷ Cost × 100. Margin is the percentage of the selling price that is profit, calculated as (Selling Price - Cost) ÷ Selling Price × 100. For example, a 50% markup results in only a 33% margin. Understanding this difference is critical for Shopify store pricing strategies and knowing how much discount damage you can afford.

Healthy profit margins for Shopify stores typically range from 20-40%, depending on your business model. Direct-to-consumer Shopify brands often target 30-50% margins, while dropshipping stores may see 15-30%. Margins below 10% are risky and unsustainable, especially when you factor in marketing costs, Shopify fees, and operational expenses. That's why giving away 10-15% in first-visit discounts is so damaging—it can cut your margins in half.

Traditional discounts reduce your revenue immediately on every first purchase. Store credit with Redeemly keeps your full revenue intact on the first sale, protecting 100% of your margins. The credit only becomes a cost when customers return to use it—meaning you only pay for customers who actually become repeat buyers. This shifts your incentive spend from acquiring one-time bargain hunters to building a loyal customer base that generates higher lifetime value for your Shopify store.

Yes! Redeemly is built specifically for Shopify and integrates seamlessly with your existing store. You can replace your current discount pop-ups and email capture offers with store credit incentives in minutes. The app works with your Shopify checkout, customer accounts, and email flows to automatically issue and track store credit. Many Shopify merchants see improved margins and repeat purchase rates within the first month of switching from discounts to store credit.