Why Your Ecommerce Margin Calculator Is Lying To You (And How to Fix the Formula)
Most ecommerce margin calculators are too optimistic because they stop at basic product cost and standard platform fees. In practice, a realistic pricing model must account for payment fees, average refund rates, FX spre
Most ecommerce margin calculators are too optimistic because they stop at basic product cost and standard platform fees. In practice, a realistic pricing model must account for payment fees, average refund rates, FX spread, tax/VAT/GST assumptions, shipping variance, advertising CAC, and a small buffer for customer support or replacement costs.
A complete formula for a realistic sanity check should look like this:
Net Profit = Sale Price - COGS - Payment Fee - Platform Fee - Shipping - Tax Reserve - CAC - Return Buffer
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Originally published by Dev.to WebDev. Aggregated on AIWithGhost for educational purposes — full credit and traffic to the original publisher.