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.
Gross margin is the money left after paying for the product itself.
| Average selling price | The price you sell your product for |
| Cost to purchase product | What 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%.
Variable costs are expenses that occur with each individual sale.
| Packaging materials | Box, bubble wrap, tape, inserts |
| Payment processing fees | Typically 2.9% + $0.30 per transaction |
| Shipping costs | Including any insurance |
| Marketplace fees | If selling on Amazon, etc. |
| Pick & pack labor/fees | Cost to fulfill each order |
| Return costs allocation | Return 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.
Fixed costs are expenses you pay regardless of sales volume.
| Monthly fixed costs | Rent, software subscriptions, employee salaries, insurance, utilities, etc. |
| Average monthly orders | Number 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.
Your profit target is the minimum amount you want to earn from each sale.
| Target profit percentage | The 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.
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:
- Your prices are too low - Consider raising your selling price
- Your costs are too high - Look for ways to reduce expenses
- 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.
Import tariffs are government taxes on imported goods that directly impact your cost of goods and overall margins.
Tariff Mitigation Strategies:
- Price increases: Calculate what percentage of tariff costs you can pass to customers
- Supplier negotiation: Seek discounts from suppliers to absorb some tariff impact
- Product redesign: Consider lighter/smaller versions to reduce shipping/material costs
- Domestic sourcing: Evaluate U.S. manufacturing options (even if partial assembly)
- Inventory planning: Balance higher inventory holding costs vs. potential tariff increases
- Product mix adjustment: Shift focus to higher-margin items less affected by tariffs