Your Regions
Five common ecommerce regions are prefilled. Rename, edit, or remove any row to match how you actually sell.
| Region | Orders | Revenue | COGS | Shipping / order | Fulfillment / order | Payment fees (%) | Ad spend | Actions |
|---|---|---|---|---|---|---|---|---|
Shared Inputs
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
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
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
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
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
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.