E-commerce Unit Economics: How to Calculate Profit Per Order (With a Worked Example)
Short answer
E-commerce unit economics tells you how much profit (or loss) each order really makes after every cost: product cost, packaging, fulfilment, delivery, payment or COD fees, returns, and the marketing cost to win the order. Many online stores grow sales while losing money on every order because they only look at product margin. Calculate profit per order, compare it with customer acquisition cost and lifetime value, and you can see which products, channels and offers deserve more budget. In the UAE, remember that prices usually include 5% VAT, which you pass on to the tax authority. Husbar reports unit economics monthly as part of Full-Stack Commerce.
Key takeaways
- ✓Profit per order includes every cost, not just product cost.
- ✓Prices in the UAE usually include 5% VAT.
- ✓Compare profit per order with acquisition cost and lifetime value.
- ✓Small improvements across several costs add up.
Costs to include in profit per order
| Cost | Example source | Tip |
|---|---|---|
| Product cost (landed) | Factory price + freight + duty | Use landed cost, not factory price |
| Packaging | Box, filler, inserts | Right-size to cut delivery cost |
| Fulfilment | 3PL pick and pack | Bundle items to reduce per-item fees |
| Delivery | Courier fee per zone | Set free-delivery thresholds wisely |
| Payment and COD fees | Gateway or COD handling | Encourage prepaid where possible |
| Returns and failed deliveries | Return shipping, write-offs | Spread their cost across all orders |
Why unit economics matter
Growth can hide losses
More orders with negative profit per order only make losses bigger. Unit economics show this early.
Smarter ad budgets
Knowing profit per order tells you the maximum you can pay to acquire a customer.
Product decisions
Some products look popular but lose money after delivery and returns; others quietly fund the business.
Investor and partner confidence
Clear unit economics make conversations with investors, banks and partners more credible.
How to calculate profit per order
- Start with the average order value including VAT.
- Remove VAT to get net revenue.
- Subtract landed product cost for the items in the order.
- Subtract packaging, fulfilment and delivery.
- Subtract payment, COD and platform fees.
- Subtract an average allowance for returns and failed deliveries.
- The result is contribution before marketing.
- Subtract customer acquisition cost to get profit per first order.
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Book a Growth AuditWorked example (illustrative figures)
- Average order value incl. VAT: AED 315.
- Net revenue excl. 5% VAT: AED 300.
- Landed product cost: AED 105.
- Packaging AED 8, fulfilment AED 12, delivery AED 18.
- Payment or COD fees: AED 9; returns allowance: AED 15.
- Contribution before marketing: 300 - 167 = AED 133.
- Customer acquisition cost: AED 90, so profit on the first order: AED 43.
- Repeat orders without acquisition cost add far more profit; replace these numbers with your own.
A worked example
Picture a UAE home fragrance brand with growing sales but no cash left at month end. It calculates unit economics and finds that small single-candle orders lose money after delivery, COD fees and ad costs. It introduces bundles, sets a free-delivery threshold above its average order value, encourages prepaid checkout and shifts ad budget towards products with the best contribution. It now tracks profit per order every month. (Illustrative example.)
Want Husbar to run it for you?
Husbar's Full-Stack Commerce shows your real profit per order in every monthly report and acts on it. Book a free Growth Audit or a free Google Meet consultation.
Lifetime value changes everything
If customers buy several times, you can afford a higher acquisition cost on the first order. Track repeat rate and lifetime value by channel.
Prices and psychology
Price changes affect unit economics most directly. Test anchors, bundles and thresholds carefully rather than discounting everything.
Check with your accountant
This is a planning method, not accounting or tax advice. Confirm VAT treatment and reporting with a qualified accountant.
Unit economics by channel and product
Calculate profit per order separately for your own store, each marketplace and each main product. Marketplace fees, delivery terms and return rates differ, and so do product margins. This view often shows that a few products and channels make most of the profit, which tells you where to focus budget and stock.
How Husbar helps
Husbar's Full-Stack Commerce tracks unit economics for you every month: landed costs, fulfilment, delivery, fees, returns and acquisition cost, and uses them to guide products, pricing and ad budgets. Our e-commerce and retail growth team can take this on end to end, or support your team. book a free Growth Audit.
Questions to ask before you start
- Do we know our profit per order?
- Are we using landed cost, not factory price?
- Which products lose money after delivery and returns?
- What is our maximum affordable acquisition cost?
- How much do repeat customers add?
Key terms
- Unit economics: revenue and costs per unit or order.
- Contribution margin: profit before fixed costs and marketing.
- Landed cost: product cost delivered to your warehouse.
- CAC: customer acquisition cost.
- LTV: customer lifetime value.
Mistakes to avoid
- Using factory price instead of landed cost.
- Forgetting VAT in price calculations.
- Ignoring returns and failed deliveries.
- Scaling ads without knowing profit per order.
- Free delivery on every small order.
Why traffic is not the real problem
Most online stores ask for more traffic when the bigger win is converting and keeping the visitors they already pay for. Better offers, faster checkout, stronger product pages and follow-up flows usually lift revenue before a single extra dirham goes into ads.
Related reading: margin vs markup for imported products, customer acquisition cost, landed cost calculator and inventory management for e-commerce.
What are e-commerce unit economics?+
The revenue, costs and profit of each order or unit sold.
How do I calculate profit per order?+
Net revenue minus landed product cost, packaging, fulfilment, delivery, fees, returns allowance and acquisition cost.
Should I include VAT?+
Calculate profit on revenue excluding VAT, since VAT collected is paid to the tax authority.
How can I improve unit economics?+
Raise order value with bundles, reduce delivery and packaging costs, cut returns, encourage prepaid and improve repeat purchase.
Does Husbar work with Shopify, Salla and marketplace sellers?+
Yes. Husbar works with online stores on Shopify, Salla, Zid and WooCommerce, and with sellers on Amazon.ae and noon, across ads, conversion and retention.
Can Husbar run my e-commerce marketing end to end?+
Yes. We can run ads, email and WhatsApp flows, product page copy and creative as one plan, or support your in-house team.
Sources
- [UAE Federal Tax Authority: VAT](https://tax.gov.ae/en/taxes/vat.aspx)
- [Gupta, Lehmann and Stuart (2004), Valuing Customers, Journal of Marketing Research](https://doi.org/10.1509/jmkr.41.1.7.25084)
- [Shopify Help Center: fulfilment](https://help.shopify.com/en/manual/fulfillment)
- [Kahneman and Tversky (1979), prospect theory, Econometrica](https://doi.org/10.2307/1914185)
Team Husbar
Husbar Editorial
Team Husbar is the strategy, psychology and research team at Husbar, a psychology-led growth agency headquartered in Dubai. Together we have worked with 100+ brands over 10+ years.
Want this applied to your brand?
We will find the psychology behind your lost sales and show you what to fix first.
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