How to forecast ecommerce profitability
- Enter the selling price or average order value and per-order product, shipping, processing and platform costs.
- Enter refunded revenue as a percentage, not the share of orders returned.
- Enter expected CPM, ad click-through rate and click-to-order conversion rate from comparable traffic.
- Review contribution after ads, predicted CPA and the break-even threshold. Test a weaker CTR or conversion rate as a downside scenario.
From impressions to order contribution
CPC = CPM ÷ (1,000 × CTR)
CPA = CPC ÷ Click-to-order conversion rate
Contribution after ads = Price − Entered order costs − Predicted CPA
Predicted ROAS = Price ÷ Predicted CPA
The break-even CPA is positive contribution before ads. Break-even ROAS is price divided by that contribution. If the order loses money before advertising, there is no affordable ad budget in this model.
Worked example: a $50 order
Take a $50 order with $15 product cost, $5 shipping, $1 packaging and a payment fee of 2.9% plus $0.30. With no other platform fee or refunded revenue, costs total $22.75 and contribution before ads is $27.25.
At a $12 CPM, 2% CTR and 3% click-to-order conversion rate, CPC is $0.60 and predicted CPA is $20. The order leaves $7.25 after advertising, a 14.5% contribution margin. Predicted ROAS is 2.5, above the break-even ROAS of approximately 1.83.
Why conversion assumptions matter
If conversion falls to 1.5% with the same CPM and CTR, CPA doubles to $40. Contribution falls to −$12.75. A profitable-looking product can therefore fail when the real traffic converts differently.
CTR and conversion rate must be positive; zero means there is no finite acquisition cost. Zero CPM is allowed and produces no ad cost, so ROAS has no denominator. Refund losses follow the shared cost-model assumptions.
Use the actual CPA calculator after launch, and ROI when you have a period's full revenue and costs. This tool's formulas are an explicit scenario model, not a promise of future campaign results.
Frequently asked questions
What does the ecommerce profit calculator forecast?
It forecasts contribution per order after entered variable costs and advertising, using CPM, click-through rate and click-to-order conversion rate. It does not calculate business net profit.
How is predicted CPA calculated from CPM?
CPC = CPM ÷ (1,000 × CTR as a decimal). Predicted CPA = CPC ÷ click-to-order conversion rate as a decimal. Enter 2 and 3 for 2% CTR and 3% conversion.
Which conversion rate should I enter?
Use orders divided by the same ad clicks used in your click-through rate. A sessions-based store conversion rate may not match a click-based ad funnel, especially when visits are lost between the ad and the store.
Are refunds modeled as returned order count?
No. Refunds represent the percentage of original revenue refunded. The model retains original product, shipping and fee costs and excludes inventory recovery and return shipping; adjust costs without double counting.
Does positive predicted contribution guarantee profit?
No. Traffic assumptions can change, and fixed overhead, taxes and cash-flow timing remain outside this per-order model. Validate the assumptions with measured campaign data.
By the SellerUtils team · Last updated October 8, 2026. Results are estimates for planning and are not financial advice.