Question 1

What's a healthy gross margin for e-commerce?

Accepted Answer

DTC brands generally aim for 60–70% gross margin to leave enough room for paid acquisition, customer support, and overhead. Below 50%, paid acquisition gets very tight. Below 25%, you're effectively running a logistics business and need wholesale or marketplace volume to make the unit economics work.

Question 2

How does this differ from the ROAS calculator?

Accepted Answer

The ROAS calculator focuses on the ad-side equation — CPM, CTR, CVR, target ROAS. This calculator focuses on the order-side equation — what's actually left after every cost component on a single order. Use this first to know your max safe ad cost, then plug that into the ROAS calculator to see whether your campaign math works.

Question 3

Should I include returns in margin math?

Accepted Answer

Yes, always. A 10% return rate effectively reduces your AOV by 10% (you refund the full order but keep most of the per-order costs). Apparel and footwear brands routinely see 20–30% return rates, which destroys margin if not modeled. The calculator nets returns out of revenue and adds the typical refund-side cost back.

Question 4

What platform fees should I worry about?

Accepted Answer

Amazon takes ~15% referral fee plus FBA storage and pick-pack costs. Etsy takes 6.5% transaction fee plus listing fees. Walmart Marketplace charges 6–15% by category. eBay 12.9% plus payment processing. Shopify direct-to-consumer is effectively 0% beyond payment processing — that's why DTC brands have such different margin structures than marketplace sellers.

Question 5

How do I increase margin?

Accepted Answer

Three main levers: (1) raise AOV via bundling, upsells, and price increases — usually the fastest fix; (2) lower COGS by negotiating with suppliers, switching freight terms, or moving to larger MOQs; (3) cut acquisition cost with better creative — fresh creative beats cheaper bids. ppl.studio handles the third lever by generating AI UGC photos in 60 seconds.

Break-Even Margin Calculator

Per-order economics

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