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Your real operating expenses, the maximum you can pay for a customer, and the ROAS target that keeps you profitable.

Ecommerce Operating Expenses Calculator

In today's challenging ecommerce landscape, understanding your precise operating expenses is essential for survival. With rising acquisition costs and current tariffs impacting imported goods, this calculator helps you determine what you can afford to spend on marketing while maintaining profitability.

Follow the steps below to calculate your maximum allowable Cost Per Acquisition (CPA) and set appropriate Return on Ad Spend (ROAS) targets.

Step 1: Calculate Your Gross Margin

Gross margin is the money left after paying for the product itself.

Average selling priceThe price you sell your product for
Cost to purchase productWhat you pay your supplier (including shipping to your warehouse, duties, etc.)

Formula:
Gross Margin $ = Average Selling Price - Cost to Purchase
Gross Margin % = (Gross Margin $ ÷ Average Selling Price) × 100

Example: If you sell a product for $50 and it costs $20 to buy from your supplier, your gross margin is $30 or 60%.

Step 2: Calculate Your Variable Costs Per Order

Variable costs are expenses that occur with each individual sale.

Packaging materialsBox, bubble wrap, tape, inserts
Payment processing feesTypically 2.9% + $0.30 per transaction
Shipping costsIncluding any insurance
Marketplace feesIf selling on Amazon, etc.
Pick & pack labor/feesCost to fulfill each order
Return costs allocationReturn rate × cost per return
Import tariffs% tariff × product cost

Example: For a $50 product with 5% return rate and $10 cost per return, plus a 25% tariff on a $20 imported product ($5), variable costs might total $27.60 per order.

Step 3: Calculate Your Fixed Costs Per Order

Fixed costs are expenses you pay regardless of sales volume.

Monthly fixed costsRent, software subscriptions, employee salaries, insurance, utilities, etc.
Average monthly ordersNumber of orders you fulfill monthly

Formula:
Fixed Costs Per Order = Total Monthly Fixed Costs ÷ Average Monthly Orders

Example: With $10,000 in monthly fixed costs and 500 orders per month, you need to allocate $20 from each order to cover fixed costs.

Step 4: Set Your Profit Target

Your profit target is the minimum amount you want to earn from each sale.

Target profit percentageThe profit margin you aim to achieve (typically 10-30%)

Formula:
Target Profit $ = Average Order Value × Target Profit %

Example: If you want a 15% profit on a $50 product, you need $7.50 profit per order.

Step 5: Calculate Your Maximum CPA & ROAS

CPA (Cost Per Acquisition) is the amount you can spend to acquire one new customer.

Formula for Maximum CPA:
Max CPA = Gross Margin $ - Variable Costs - Fixed Costs Per Order - Target Profit

Formula for Minimum ROAS:
Minimum ROAS = Average Order Value ÷ Maximum CPA

What if your CPA is negative? This means one of three things:

  1. Your prices are too low - Consider raising your selling price
  2. Your costs are too high - Look for ways to reduce expenses
  3. You need repeat purchases - Calculate based on customer lifetime value

Using Customer Lifetime Value:
Customer LTV = Max CPA × Average Number of Orders Per Customer

Example: If your AOV is $50 and your Maximum CPA is $10, your minimum ROAS target is 5.0, meaning every $1 spent on marketing should generate at least $5 in sales.

Tariff Impact Assessment

Import tariffs are government taxes on imported goods that directly impact your cost of goods and overall margins.

Tariff Mitigation Strategies:

  1. Price increases: Calculate what percentage of tariff costs you can pass to customers
  2. Supplier negotiation: Seek discounts from suppliers to absorb some tariff impact
  3. Product redesign: Consider lighter/smaller versions to reduce shipping/material costs
  4. Domestic sourcing: Evaluate U.S. manufacturing options (even if partial assembly)
  5. Inventory planning: Balance higher inventory holding costs vs. potential tariff increases
  6. Product mix adjustment: Shift focus to higher-margin items less affected by tariffs
Free tool

Ecommerce ROAS Calculator

Step 1: Gross Margin

The average price you sell your products for.

What you pay your supplier including import costs.

Step 2: Variable Costs

Box, bubble wrap, tape, inserts, etc.

Credit card fees, PayPal fees, etc.

Average shipping cost per order.

Amazon, eBay, or other marketplace fees.

Cost to fulfill each order.

Return rate × cost per return.

Enter the actual dollar amount of the tariff per product (not the percentage). For example, if your product costs $50 and has a 25% tariff, enter $12.50 here.

Any other costs that occur with each order.

Step 3: Fixed Costs

Enter your total monthly fixed costs (rent, salaries, software, insurance, utilities, etc.). This will be divided by your monthly orders to calculate fixed cost per order.

Number of orders you fulfill monthly. This is used to calculate your fixed cost per order.

Step 4: Profit Target

The profit margin you aim to achieve (10-30%).

Step 5: Customer Value (Optional)

How many times a customer buys from you on average.