Attribution & Analytics
How to Calculate Profit per Order From Paid Ads
Profit per paid order starts with the order value and subtracts the costs that order creates.
A practical contribution formula
Order revenue
- COGS
- payment fees
- fulfilment
- shipping subsidy
- expected return/refund cost
- acquisition cost
= contribution after advertising.
Example
Revenue: $120
COGS: $50
Fees/fulfilment/shipping: $15
Ad CPA: $35
Contribution after ads = $20.
Use order-level or cohort averages
Exact product costs can vary by basket. For strategic decisions, average contribution by product group/customer cohort may be enough.
Include discounts correctly
Use the actual net selling price, not MSRP. A discounted order has less revenue available to pay the same product cost.
Refunds matter
If 10% of similar orders refund, incorporate an expected allowance or use net cohort profit later.
This calculation makes CPA meaningful: you can see what each acquired order actually leaves behind.
Need the real economics laid out?
If you know order revenue and CPA but not what each paid order contributes after variable costs, send us an inquiry. We can build the calculation around Shopify data.