Shopify Profit Margin Calculator

Profit margin is the percentage of revenue that remains as profit after deducting costs. For Shopify stores, understanding your margin helps you price products effectively, evaluate the true cost of discounts, and make data-driven decisions about promotions and growth strategies.

Discounts directly reduce your revenue while your costs (COGS) remain the same, which significantly compresses your profit margin. For example, a 10% discount can cut your profit margin by 25-50% or more depending on your initial margin, making discounts one of the most expensive customer acquisition tactics with 100% margin hit on every sale.

Instead of traditional discounts, you can offer store credit toward the next purchase. For example, offer up to 5% back as store credit instead of giving 10% off upfront. This protects your margin on the current sale and encourages repeat purchases.

With discounts, you lose margin immediately on every sale (100% cost). With store credit offering up to 5% back, you keep full margin on the initial purchase, and only 28% of customers typically redeem their credit. This means 72% of the credit you issue never gets redeemed, making the true cost just 1.4% (for 5% credit) instead of 10-20% for discounts.

You can use either method. If you know your exact product cost, enter the dollar amount. If you want to estimate based on industry standards (typically 35-45% for many products), use the percentage slider. The calculator will compute your margins either way.

No, this is a completely free online tool that requires no registration, installation, or Shopify store connection. Simply enter your numbers and get instant results. The monthly units field is optional and only needed if you want to see monthly profit impact.