Methodology

Last reviewed: September 6, 2026

1. Purpose of the methodology

Ecomly Profit is built to help ecommerce sellers understand product economics in a consistent way across marketplaces and scenarios. Our calculators are designed for planning, comparison and decision support rather than for accounting records or marketplace invoicing.

The methodology separates common economic concepts from marketplace-specific fee logic so that one platform’s rules do not affect another platform’s calculations.

2. Core calculation framework

At the highest level, Ecomly Profit begins with revenue and subtracts relevant costs and fees to estimate modeled profit.

Depending on the calculator, some cost categories may be entered directly by the user while others may be derived from marketplace-specific rules.

3. Revenue treatment

Revenue generally represents the selling price or transaction value used as the starting point for a calculation. Where quantity is relevant, total revenue may be modeled as selling price multiplied by units.

Discounts, refunds, taxes or shipping revenue are included only when the relevant calculator explicitly models them or the user incorporates them in the entered assumptions.

4. Product and operating costs

Product costs can include cost of goods sold (COGS), manufacturing cost or acquisition cost, depending on the context of the tool. Other variable costs may include shipping, packaging, payment costs, returns, advertising or marketplace-related charges.

Users should avoid double-counting the same expense in multiple fields.

5. Marketplace-specific fee logic

Marketplace fee structures can differ by country, category, seller plan, fulfillment method, transaction type and promotional program. Ecomly Profit keeps marketplace logic isolated by platform so that Amazon, Shopify, Etsy, TikTok Shop and eBay can be modeled independently.

Where a marketplace uses tiered, category-specific, fixed-plus-variable or threshold-based fees, the calculator logic should preserve those rules rather than reduce them to a single universal percentage.

6. Contribution profit and margin

Contribution profit is intended to show the amount remaining after the variable costs included in a scenario are deducted from revenue.

Which costs are included depends on the calculator and the user’s assumptions. Contribution margin should therefore be interpreted together with the displayed inputs.

7. Gross profit and gross margin

Where gross profit is shown, it generally reflects revenue less product cost before broader selling or operating expenses.

This is different from contribution profit when additional variable expenses such as marketplace fees, shipping or advertising are included.

8. Break-even methodology

Break-even calculations estimate the point at which modeled profit reaches zero under the entered assumptions.

For pricing tools, break-even may be expressed as the minimum selling price needed to cover included costs and fees. For advertising tools, break-even may be expressed as the maximum allowable acquisition cost or the ROAS at which contribution profit before advertising is fully consumed.

9. ROAS methodology

ROAS, or return on ad spend, is modeled as revenue divided by advertising spend.

Break-even ROAS is derived from the relationship between revenue and contribution available before advertising. Target ROAS may incorporate an additional target-profit requirement.

ROAS calculations are planning models only and do not predict actual ad performance.

10. Pricing for a target margin

When a pricing calculator solves for a target margin, it estimates the selling price required so that the modeled profit equals the chosen percentage of selling price after included fees and costs.

Because percentage-based marketplace or payment fees rise with selling price, target-margin pricing may require solving a formula in which price appears on both the revenue and fee sides of the equation.

11. Landed cost methodology

Landed cost is intended to estimate the total cost of bringing inventory to the point at which it is ready for sale or storage.

Per-unit landed cost is calculated by dividing the total modeled landed cost by the number of units.

Actual customs duties, taxes, port fees, currency conversion and carrier charges may differ from the model.

12. Rounding and precision

Calculators may display rounded currency values, percentages or rates for readability. Internal calculations may use more precision than is shown on screen.

Marketplace invoices may apply their own rounding conventions at item, transaction or statement level, so small differences between modeled and billed amounts can occur.

13. Assumptions and user inputs

Calculator outputs are only as reliable as the assumptions entered. Users should verify selling price, product cost, shipping, fee rates, advertising assumptions, return rates and other inputs before relying on a result.

Where a calculator provides defaults, examples or preset values, those should be treated as starting points rather than facts about a specific business.

14. Source hierarchy

For marketplace-specific rules, Ecomly Profit aims to prioritize official marketplace documentation, fee schedules, seller help pages and policy resources where available. Secondary sources may be used for context, but official sources should take precedence when they conflict.

Because marketplace documentation changes over time, users should verify commercially important assumptions directly with the relevant provider.

15. Review and update process

Methodology, fee logic and live-site behavior are reviewed as separate quality-assurance layers. This helps distinguish a mathematical or formula issue from an outdated marketplace rate, content issue or display problem.

Where material marketplace rules or calculator logic change, the relevant calculator, guide or methodology note should be updated and retested.

16. Quality checks

Quality checks may include:

• testing known input/output scenarios;
• checking break-even relationships mathematically;
• verifying percentage and fixed-fee interactions;
• reviewing category-specific marketplace logic;
• checking edge cases and zero-value inputs; and
• confirming that displayed labels match the calculation being performed.

17. What the models do not guarantee

Ecomly Profit does not guarantee that modeled values will match marketplace invoices, tax calculations, accounting records, customs assessments, ad-platform attribution or actual business results.

Real-world outcomes can be affected by refunds, returns, taxes, discounts, fulfillment charges, currency conversion, advertising performance, inventory loss, financing costs, regulatory charges and other factors not captured by a particular calculator.

18. Intended use

The methodology is designed for product-level planning, pricing, channel comparison, scenario analysis and ecommerce decision support.

It is not a substitute for professional advice, marketplace statements, contracts, invoices, accounting systems or official tax and customs guidance.

19. Related policies

For important limitations and legal terms, see our Disclaimer, Terms of Use and Editorial & Review Policy.