Calculating profit after supplier, payment and support costs

To work out what completed orders earned, reconcile retained revenue with supplier invoices, payment charges and attributable support costs. Add acquisition and other variable costs to calculate contribution. Subtract relevant fixed costs for the period to estimate an operating result. Keep refunds in one consistent place so they are not counted twice.

Build a completed-order record

Record the customer’s product payment, delivery charge and discounts for the exact order. Account for GST consistently with the store’s circumstances. Match the supplier’s item, packing, handling and delivery charges to its invoice, including any separate parcels.

Use the payment provider’s actual transaction charge, including applicable fixed and percentage components. If the platform also charges a transaction fee, establish whether it is additional or already in another line. A headline rate is a poor substitute for the charge on a particular payment method or currency.

Support work needs a stated costing method. You might record minutes spent on an order at a suitable labour cost, or divide support cost for comparable orders by their order count. Keep ordinary enquiries separate from exceptional remedy work if remedies have their own allowance. Where individual time records do not exist, label the allocation as an estimate.

Calculate contribution before allocating overhead

The figures are invented to show the arithmetic; they are not supplier quotes, fee schedules or typical margins. If the offer were assigned $6.00 of fixed costs per order, the illustrative amount after that allocation would be $14.50 before tax and unmodelled remedies. The allocation depends on the assumed volume. Rent, subscriptions and salaried overheads do not automatically change with each order.

For the period as a whole, calculate total retained revenue − total variable costs − relevant fixed costs. If you also report a result by product, state how shared overheads were allocated. A positive order contribution can coexist with a period loss if volume is too low to cover fixed costs.

Reconcile without double counting

Count supplier delivery as a cost even when the customer sees “free delivery”. Count a customer delivery payment as revenue when charged. Do not count campaign spend both in the period total and again as a per-order acquisition charge. Compare the payment-provider settlement with the sale and fee records; the amount deposited can differ from the customer’s payment.

For a later refund, reduce retained revenue and add only remedy costs or recoveries not already recorded. A supplier credit and a customer refund are separate entries.

Review the result by product and delivery route. Use invoices and transaction records where available, and keep allocated support and acquisition costs visibly labelled. This completed-order calculation answers what the recorded orders earned; a forecast for an untested offer remains an estimate.

Key Financial Metrics for Dropshipping Orders