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Calculate Bundle Profit
Common Questions
Frequently Asked Questions
How do I calculate true bundle profit?
Take the discounted bundle price, subtract the sum of component COGS, ad spend per order, and payment processing fees. That's bundle profit per order. Bundle margin is profit divided by the discounted price. Most merchants forget the discount drag - the difference between what components would have sold for separately and the discounted bundle price.
When does a bundle discount pay for itself?
A bundle pays off when (a) the buyer wouldn't have purchased every component separately at full price, OR (b) the AOV uplift from bundling exceeds the discount drag. If 60% of bundle buyers would have just bought one item, the bundle is incremental revenue. If 90% would have bought everything anyway, the discount is pure margin sacrifice.
What discount depth is "safe" for bundles?
It depends on your component margins. A bundle made of 60%+ margin components can absorb a 20% discount and still hit 30% bundle margin. Bundles made of 35-45% margin components break around 12-15% discount before margin drops below 20%. Always run the math at your specific component COGS before committing.
How should I allocate bundle revenue to components?
The most defensible method is proportional to standalone list price: a component representing 40% of the sum of full-price values gets 40% of the discounted bundle revenue. This matches how Shopify and most accounting standards allocate bundle revenue. Some merchants allocate by COGS instead, which inflates margin on cheap components.
Should bundles use a separate ad CPA than individual products?
Yes. Bundle-specific ads usually have a different CPA because bundle CTAs convert at a different rate than single-product CTAs. Higher AOV bundles often have a higher CPA in absolute terms but a lower CPA as a percentage of AOV. Use the actual bundle-campaign CPA, not your blended product CPA.
What about shipping cost on bundles?
Bundles often ship as one package, saving you 30-50% vs shipping components separately. If you offer free shipping on bundles, include the saved shipping in your bundle margin calculation as a positive offset to the discount drag. This is one of the few cases where bundles legitimately create value.