E-Commerce Unit Economics

Reviewed 2026-08-28

Methodology and sources

This ecommerce unit-economics planning result is derived only from the visible user-entered order value, COGS, fulfillment cost, payment fees, CAC, expected purchases, and user-supplied provenance fields. CostSignals does not fetch, validate, update, or endorse those entered assumptions or the calculated results.

Formula in plain English

The calculator subtracts entered COGS, shipping or fulfillment cost, and payment fees from entered average order value for contribution margin. It divides that margin by order value when order value is positive for gross-margin ratio, divides CAC by positive contribution margin for break-even orders and otherwise returns zero, and multiplies contribution margin by entered purchases for estimated LTV.

Visible assumptions

• Every monetary amount and purchase assumption is user-entered. The required source name and YYYY-MM-DD source date, plus optional source URL, are provenance fields only and are not fetched, validated, refreshed, or endorsed by CostSignals.
• This calculator exposes no select fields or multiplier branches. Compatibility baseCosts values remain in the generated contract, but no output formula references them.
• grossMarginPercent is a raw fraction, so 0.47 corresponds to 47% when displayed with percentage formatting. breakEvenOrders is a raw order-count ratio, not a growth promise.
• churnedMrr aliases cac, netMrrChange aliases contributionMargin, and projectedMrr aliases ltv for compatibility only; they are deprecated names and do not convert this worksheet into an MRR model.
• If contribution margin is zero or negative, breakEvenOrders returns 0 to indicate no positive break-even order count was calculated. If average order value is zero, grossMarginPercent returns 0 as a formula guard rather than a profitability conclusion.

Worked example

Limitations

• The calculator does not validate price, margin, CAC, retention, repeat-purchase behavior, taxes, refunds, inventory strategy, shipping promises, vendor selection, or realized profitability.
• The model excludes returns, discounts, ad-creative cost, payment reserves, marketplace fees beyond the entered amount, subscriptions, overhead, tax, and every other item not explicitly entered.
• The FTC and IRS sources provide fulfillment-order and small-business tax context only; they do not support an entered order value, cost input, CAC, repeat-purchase assumption, margin benchmark, tax outcome, or modeled result.

Practical next steps

1. Document the exact source, date, units, and inclusion rules behind every entered revenue, cost, CAC, and repeat-purchase assumption.
2. Compare scenarios using the same product mix, fulfillment treatment, return policy, and omitted-cost treatment before making pricing or channel decisions.
3. Validate retention, tax, fulfillment, and accounting treatment outside this arithmetic worksheet before claiming unit-economics performance.

Source records