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Net Profit by Region Calculator

See which regions actually make money after COGS, shipping, fulfillment, payment fees, and ad spend - with optional VAT and overhead allocation.

Your Regions

Five common ecommerce regions are prefilled. Rename, edit, or remove any row to match how you actually sell.

RegionOrdersRevenueCOGSShipping / orderFulfillment / orderPayment fees (%)Ad spendNew customersActions

Shared Inputs

The formula

How net profit by region is calculated

Net profit = Revenue - COGS - Shipping - Fulfilment - Payment fees - Ad spend - Allocated overhead - Tax (when treated as a cost)

Every line is calculated inside a single region, from that region's own revenue and order count. Overhead is the one exception: it is a store-wide number, so each region takes a share of it in proportion to its revenue.

Revenue
What the region billed in the period, before any cost. Enter it net of refunds if you want a net-of-refunds answer, because the calculator does not model returns separately.
COGS
Product cost, entered either as a percentage of the region's revenue or as a flat amount per order. Use the per-order mode when a market pays a different landed cost for the same product - duty and freight into that market belong here.
Shipping and fulfilment
Both are per-order rates multiplied by the region's order count. Shipping is what the carrier charges you to get the parcel there; fulfilment is what it costs to pick, pack and hand it over.
Payment fees
The processor's cut as a percentage of the region's revenue. Cross-border and multi-currency rates are usually higher than domestic ones, which is why this is a per-region input rather than one store-wide number.
Ad spend
Marketing spend attributed to that region. If your ad platforms report spend by country, use those figures. If they do not, splitting your total by each region's revenue share is the honest approximation.
Allocated overhead
Monthly operating costs - salaries, software, rent - shared out by revenue share. A region with 30% of revenue carries 30% of overhead.
Tax
VAT, GST or sales tax as a percentage of the region's revenue. Only deducted when you treat tax as a cost, which is right when you are registered and remitting in that market and wrong when you collect it as a pass-through.
  • POAS is net profit divided by ad spend. Below 1.0 the region is not covering its own advertising once every other cost has landed, which ROAS on its own will never show you.
  • Because overhead is shared by revenue share, a small region can look profitable on contribution margin and unprofitable on net profit. Both are shown - contribution margin answers 'should we keep selling here', net profit answers 'is this region carrying its weight'.
  • The cost ratios are each region's own costs as a percentage of its own revenue. They are what makes two regions comparable: a market at 20% shipping against a 7% blended average has a freight problem, not a pricing problem.

Worked examples

Three worked examples

The same arithmetic across three situations. In every one the headline revenue looks fine and a single cost line is what decides the answer.

Example 1

A US store adding the EU

Same product, same price, same advertising efficiency. Only freight and payment rates differ. The EU still turns a profit, at roughly half the margin.

Inputs

US
500 orders, 50,000 revenue, 32% COGS, 6 shipping, 3 fulfilment, 2.9% fees, 12,000 ads
EU
200 orders, 20,000 revenue, 32% COGS, 14 shipping, 4 fulfilment, 2.5% fees, 5,000 ads
Monthly overhead
8,000

Working

  1. US costs: COGS 16,000, shipping 500 x 6 = 3,000, fulfilment 1,500, fees 1,450, ads 12,000
  2. US contribution margin: 50,000 - 16,000 - 3,000 - 1,500 - 1,450 - 12,000 = 16,050
  3. US overhead share: 8,000 x (50,000 / 70,000) = 5,714, so net profit = 10,336 (20.7%)
  4. EU costs: COGS 6,400, shipping 200 x 14 = 2,800, fulfilment 800, fees 500, ads 5,000
  5. EU contribution margin: 20,000 - 15,500 = 4,500, less 2,286 overhead = 2,214 net (11.1%)
  6. Cost ratios side by side: shipping is 6.0% of US revenue and 14.0% of EU revenue. Every other line is within a point.

EU net margin vs US

11.1% vs 20.7%

The EU is worth keeping, and the entire gap is freight. Nine of the ten margin points are recoverable from a carrier rate or a shipping threshold - not from a price rise or a leaner ad account.

Example 2

The UK against the EU after duty

Identical revenue, identical ad spend, identical fulfilment. Duty and higher freight land on the EU side, entered as a higher effective COGS.

Inputs

UK
300 orders, 30,000 revenue, 34% COGS, 9 shipping, 4 fulfilment, 2.5% fees, 7,000 ads
EU
300 orders, 30,000 revenue, 41% COGS, 15 shipping, 4 fulfilment, 2.5% fees, 7,000 ads
Monthly overhead
6,000

Working

  1. UK: gross profit 30,000 - 10,200 = 19,800; less 2,700 shipping, 1,200 fulfilment, 750 fees, 7,000 ads = 8,150 contribution margin
  2. UK net profit: 8,150 - 3,000 overhead = 5,150 (17.2%), POAS 0.74
  3. EU: gross profit 30,000 - 12,300 = 17,700; less 4,500 shipping, 1,200 fulfilment, 750 fees, 7,000 ads = 4,250
  4. EU net profit: 4,250 - 3,000 overhead = 1,250 (4.2%), POAS 0.18
  5. Cost ratios: COGS 34.0% vs 41.0%, shipping 9.0% vs 15.0%. Ad cost is 23.3% on both sides.

EU net margin

4.2%, POAS 0.18

Same revenue, same ad spend, a quarter of the profit. Two cost lines account for all of it, and both are fixed at the border rather than in the ad account - which is where most people look first.

Example 3

Rest of world, with VAT treated as a cost

A long-tail region on a 22 shipping rate, where you are VAT-registered and remitting 15% rather than passing it through.

Inputs

Core markets
800 orders, 80,000 revenue, 30% COGS, 7 shipping, 3 fulfilment, 2.9% fees, 18,000 ads
Rest of world
100 orders, 11,000 revenue, 30% COGS, 22 shipping, 6 fulfilment, 3.5% fees, 3,000 ads, 15% tax as a cost
Monthly overhead
10,000

Working

  1. Rest of world gross profit: 11,000 - 3,300 = 7,700
  2. Less shipping 100 x 22 = 2,200, fulfilment 600, fees 385, ads 3,000, giving 1,515 contribution margin
  3. Less overhead 10,000 x (11,000 / 91,000) = 1,209, leaving 306 before tax
  4. Less VAT 11,000 x 15% = 1,650, giving net profit of -1,344 (-12.2%)
  5. Core markets over the same period: 18,889 net profit at 23.6%, POAS 1.05

Rest-of-world net profit

-1,344 (-12.2%)

Positive contribution margin, negative net profit. The region pays for its own variable costs but not its share of overhead or its tax bill - and the tax line alone is larger than the profit above it. Whether that is acceptable depends on whether you expect those customers to come back.

How It Works

How Net Profit by Region Is Calculated

Most ecommerce dashboards stop at ROAS or gross margin. That hides which regions actually pay you back after every variable cost lands. This calculator walks the full waterfall - the same one MerchantFlow runs on live store data.

  1. 1

    Revenue minus COGS = Gross Profit

    Start with regional revenue. Subtract Cost of Goods Sold, either as a percentage of revenue or as a flat dollar amount per order. The result is gross profit - the ceiling on every other margin number.

  2. 2

    Subtract variable costs to get Contribution Margin

    Take shipping per order, fulfillment per order, payment processing fees (often 2.5-3.5% of revenue), and ad spend out of gross profit. What's left is contribution margin: the dollars each region throws off before any shared overhead.

  3. 3

    Allocate shared overhead by revenue share

    Monthly operating overhead (salaries, software, rent, agency fees) is shared across regions. The calculator allocates it proportionally by revenue share, matching the standard ecommerce P&L approach used in finance teams.

  4. 4

    Decide how to treat VAT or sales tax

    If you absorb VAT in EU prices or sales tax in US markets, turn on 'treat tax as a cost' and enter the effective rate per region. If you pass tax through to the customer as a line item, leave it off - it's already excluded from revenue.

  5. 5

    Net Profit, Net Margin, and POAS

    What remains is true net profit per region. Net margin = net profit / revenue. POAS (Profit on Ad Spend) = net profit / ad spend. POAS is the harder, more honest cousin of ROAS - it tells you how many dollars of profit each ad dollar actually generates.

POAS Explained

Why POAS Beats ROAS for Regional Profitability

ROAS (Return on Ad Spend) measures revenue per ad dollar. POAS (Profit on Ad Spend) measures net profit per ad dollar. A region can post 4x ROAS and still lose you money once COGS, shipping, and fees land - especially in regions with high shipping costs or low AOV. POAS above 1.0x means the region's ad spend is paying back at least its own cost in net profit. Most healthy ecommerce stores aim for blended POAS between 1.3x and 2.0x at scale.

POAS < 0

Ads are deepening losses. Pause spend in this region or fix the underlying margin first.

POAS 0 - 1x

Ads generate some profit but don't cover their own cost on a contribution basis. Stable only if AOV or LTV repair makes it up.

POAS 1 - 2x

Healthy. Each ad dollar pays back its own cost in net profit. Most mature stores live here at blended level.

POAS > 2x

Strong. You likely have room to scale spend in this region without breaking the model.

Common Questions

Net Profit by Region: FAQ

How do I calculate net profit by region for my ecommerce store?

Take regional revenue, subtract Cost of Goods Sold, then subtract every variable cost that lands per order or per dollar of revenue: shipping, fulfillment, payment processing fees, and ad spend. Allocate shared overhead (salaries, software, rent) by revenue share. If you absorb VAT or sales tax, subtract that too. What remains is true net profit. The calculator on this page runs that exact waterfall.

What's a good net margin for ecommerce by region?

It depends on category and region. Apparel and beauty often run 8-15% net margin at scale. Consumer electronics 3-8%. Premium and direct-to-consumer brands can hold 15-25% if AOV is high and shipping zones are tight. The same store often has very different margins by region: a US-domestic order might net 18% while a cross-border AU order nets 4% once shipping and FX land.

What is POAS and how is it different from ROAS?

ROAS (Return on Ad Spend) is revenue divided by ad spend. POAS (Profit on Ad Spend) is net profit divided by ad spend. A 4x ROAS sounds great until you realize that with 30% COGS, 12% shipping, 3% fees, and 25% other costs, the same campaign might be running at 0.6x POAS - losing money on every order. POAS is the profit-aware metric. ROAS is the vanity version.

Should I treat VAT or sales tax as a cost?

Only if you absorb it. In most EU and UK pricing, VAT is included in the price the customer sees, so the merchant effectively absorbs it - turn the toggle on. In most US states, sales tax is added at checkout and passed through to the tax authority - leave it off, since it's already excluded from revenue. Some marketplaces handle tax remittance for you; check your settlement reports before assuming.

How should I allocate shared overhead across regions?

By revenue share is the simplest defensible method, and it's what most ecommerce finance teams use. If one region generates 40% of revenue, it absorbs 40% of monthly overhead. More sophisticated allocations exist (by order count, by headcount supporting the region, by hours of marketing work) but revenue-share is a strong default and matches how investors and lenders model your business.

Why does my best ROAS region sometimes have the worst net profit?

Three usual suspects: shipping cost (cross-border orders often double per-order shipping), payment processing (international cards typically charge 1-2% more), and FX or refund risk. A region can post the best top-line revenue and ROAS but lose money once those costs land. The waterfall in this calculator is exactly the diagnostic for spotting that pattern.

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