How the profit margin calculator works
Net profit = price − product cost − shipping − ad cost − payment fees
Profit margin = net profit ÷ price × 100
The suggested price uses the reverse formula: fixed costs per order divided by (1 − fee rate − target margin). Example: a product costing 200, shipping 50, ad cost 80 and payment fees of 2.5%. To reach a 20% net margin, you need a price of about 426.
Profit margin vs. markup
People mix them up. Markup is calculated on cost: a product costing 200 and selling for 500 has a 150% markup. Profit margin is calculated on the selling price, after all costs. So a 150% markup can leave only a 30% net margin. Use net margin when pricing and negotiating with suppliers, because that's what actually stays in your pocket.
Where does ad cost per order come from?
It's the cost per result (CPA) of your sales campaigns in Ads Manager. If you sell cash on delivery, don't use that number as is: first calculate the real cost per delivered order after confirmation and returns with the COD order cost calculator, then enter it here. To find the most you can pay per order before losing money, use the target CPA calculator.
What is a good profit margin for ad-driven stores?
There's no single number, but a practical rule: if your gross margin (before ads) is below 50%, profiting from Facebook ads will be hard, because ad cost alone can take 20% to 35% of the price. Low-margin products need a higher average order value through bundles, or customers who buy repeatedly. Read How to Calculate ROAS and Break-Even ROAS: When Is a Facebook Campaign Really Profitable? to link margin to the minimum ROAS you need, and Ecommerce Facebook Ads KPIs: The Numbers That Actually Decide Profit for the key store metrics.