How the Shopify profit calculation works
A Shopify order's revenue is the item price after discount plus the shipping you charge. Card processing applies to that whole amount. The postage you actually pay Royal Mail or a courier is a separate cost. Keeping them apart avoids the most common double-count: subtracting shipping from revenue and then again as a cost.
Per order: net revenue − product cost − postage − packaging − returns − payment fees = profit before ads; subtract ad cost per order for profit after ads. Your plan fee and apps are monthly, so they come off the monthly total — and we show them per order so you can see what each sale has to cover.
Worked example: £35 item with £3.95 shipping on Basic
With the example values (not VAT registered), the customer pays £38.95. At the example Basic online card rate of 2% + 25p the fee is £1.03. After £12 product, £3.10 postage, £0.80 packaging and £1 returns, profit before ads is £21.02; after £6 ads, £15.02 (38.6%). 120 orders a month, less £25 plan and £15 apps, leaves £1,762.52 — plan and apps cost £0.33 per order.
Wondering whether a higher plan's lower card rate pays for itself? Use the Shopify plan break-even calculator to compare Basic vs Grow or Grow vs Advanced at your order volume.
Shopify Payments vs an external payment gateway
With Shopify Payments you pay one card rate. With another provider, you pay that provider's processing fee and Shopify's third-party transaction fee (example 2% on Basic). The calculator never charges both Shopify Payments and an external gateway on the same order. In the example, switching to a gateway at 1.9% + 20p would cost £1.72 in fees and leave £14.33 per order. Rates vary by card type, region and agreement — none is guaranteed.
VAT
If you're VAT registered, output VAT is removed from the order total (item + shipping charged) using one rate — a simplification; your shipping VAT treatment may differ. Costs are treated as net of VAT you can reclaim. Special schemes aren't modelled, and this isn't tax advice.
Common mistakes
- Forgetting card fees also apply to shipping charged.
- Ignoring the plan fee because it's "only £25" — at low order volumes it's a real cost per order.
- Adding the 2% third-party fee when you use Shopify Payments.
- Applying a discount to shipping when the discount is on the item only.