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Unit economics of an online store

| Article: 6 min read | Analytics

Unit economics of an online store is a calculation of how much money the store earns or loses on one unit of the business: one order or one customer, after all variable costs. It answers a simple question: does the business become more profitable as sales grow?

In plain words

Revenue shows how much money passed through the till. Unit economics shows how much of it stayed with the store after it paid for the product, delivery, fees, advertising, returns, and parcels the buyer didn't pick up.

If the store loses 50 UAH on every order, growing sales only increases the loss. If 250 UAH is left on every order, the only question is whether that money covers the fixed costs: salaries, warehouse rent, CRM, accounting.

The key concept here is contribution margin. It is the money left from sales after paying all the variable costs tied to the product. Variable costs grow with the number of sales (product, delivery), while fixed costs don't depend on them (rent, salaries) (Corporate Finance Institute).

What to treat as the unit: an order or a customer

There are two approaches, and both are useful.

  • Unit = order. You calculate how much is left from one average order. This suits stores where most buyers buy once (furniture, appliances, gifts), and weekly control.
  • Unit = customer. You calculate how much margin a customer brings over their whole lifetime (LTV) and how much it cost to acquire them (CAC). This is how to count if people come back: cosmetics, pet food, coffee, children's products. Here the first order may be a loss, and profit comes from repeat ones.

Start with the order: it's easier to calculate and check. Once you have at least a year of purchase history, add the per-customer calculation.

What goes into the margin per order

From the order's revenue, subtract:

  1. Cost of the product: the purchase price with delivery to your warehouse, and customs duty if there is any.
  2. Delivery to the customer, if the store pays for it (free delivery above a threshold, promotions).
  3. Packaging and picking: the box, filler, warehouse labor, if it's paid per order.
  4. Payment fees: acquiring, payment services, the fee for transferring funds on cash on delivery. If you sell through Rozetka or Prom, the marketplace commission as well.
  5. Advertising per order: ad spend divided by the number of orders (CPO).
  6. Returns: delivery back, product that can no longer be sold as new, refunded money.
  7. Unclaimed cash-on-delivery orders: a Ukrainian peculiarity, see below.

What's left is the contribution margin per order. From it the store covers fixed costs, and whatever remains is operating profit.

Unclaimed orders: a separate cost line for Ukraine

A large share of Ukrainian shoppers pay on receipt at Nova Poshta or Ukrposhta. Some of these parcels are not picked up. For the store, this is an order already paid for with advertising, packaging and delivery, but with no revenue, and the goods spend days or weeks traveling back and can't be sold.

What to know:

  • In October 2024, Nova Poshta cancelled the return fee and the 0.5% commission on declared value that the sender paid when a recipient refused a parcel; returning unclaimed parcels was free even before that (Forbes Ukraine). Carriers' terms change: from April 13, 2026, Nova Poshta updated its rates (for example, a parcel up to 2 kg within Ukraine is 90 UAH, up to 10 kg 135 UAH, up to 30 kg 200 UAH), and the announcement says nothing about a change to the return rules; the storage cost is stated as unchanged (Nova Poshta, 02.04.2026). Check the current rates in your account before calculating.
  • Even with free returns, an unclaimed order costs money: advertising, packaging, a manager's and the warehouse's work, delivery to the customer if the store pays for it, "frozen" stock.
  • Count unclaimed orders against shipped orders, not orders placed on the site, and separately for payment on receipt and prepayment.

The formula

Contribution margin per order = average order value − cost of goods − delivery − packaging − fees − advertising per order − losses on returns and unclaimed orders (per order)

Contribution margin ratio = contribution margin ÷ revenue × 100%.

A calculation example (hypothetical numbers)

All the numbers below are made up for the example. A home goods store, average order value 1,500 UAH, product cost 55% (825 UAH). Take 100 shipped orders in a week:

  • 9 parcels were not picked up (9% unclaimed);
  • 3 orders were returned after purchase;
  • sold and not returned: 88 orders.

Item

Calculation

Amount, UAH

Revenue

88 × 1,500

132,000

Cost of goods

88 × 825

−72,600

Delivery to the customer (the store pays for all 100 shipments)

100 × 80

−8,000

Delivery of returns

3 × 80

−240

Packaging

100 × 15

−1,500

Payment fees (say 2% of revenue)

2% × 132,000

−2,640

Advertising (CPO 250 UAH per order placed)

100 × 250

−25,000

Contribution margin


22,020

What this shows:

  • 220 UAH is left per shipped order, about 17% of revenue.
  • The product "markup" (1,500 − 825 = 675 UAH) is three times larger than the real result. If you look only at that, the store overestimates its profit.
  • If unclaimed orders rise from 9 to 20 parcels out of 100, 77 orders will be sold, and the contribution margin will fall to about 14,900 UAH, that is by a third, although advertising and delivery will cost the same.
  • The largest variable item after the product is advertising. Cutting CPO from 250 to 200 UAH gives +5,000 UAH for every 100 orders.

Next, the fixed costs have to be paid out of 22,020 UAH a week. If they are larger, the store is loss-making even though every order is formally "in the black".

How different sources see it

  • Accounting sources calculate contribution margin as revenue minus variable costs (Corporate Finance Institute) and distinguish it from gross margin (revenue minus cost of goods, Corporate Finance Institute): contribution margin shows what each sale leaves after variable costs and helps evaluate individual products, while gross margin accounts for all direct production costs and speaks to overall profitability (source).
  • Customer value is better calculated on contribution margin than on revenue or gross margin: it gives a realistic ceiling for acquisition spend.
  • Practitioners differ on whether to include advertising in the order margin. Some count a "margin before marketing" and compare it separately with CAC. Both approaches work; the main thing is not to mix them in one report.

Common mistakes

  • Calculating margin as price minus purchase cost. Delivery, fees and advertising can eat most of that difference.
  • Ignoring unclaimed orders. Especially dangerous for stores with a large share of cash on delivery and impulse products.
  • Taking an average across the whole range. Margins of different categories can differ many times over. Count separately for at least 3–5 key categories.
  • Counting advertising only against orders that were picked up. Advertising was paid for all orders placed, unclaimed ones too.
  • Not updating the calculation. Delivery rates, exchange rates and ad costs change; a calculation six months old may be wrong.

FAQ

What is unit economics in plain words? A calculation of how much money is left for the store from one order or one customer after all the costs that depend on the number of sales.

How do I calculate an online store's unit economics? Take the average order value and subtract the cost of goods, delivery, packaging, fees, advertising per order, and the losses on returns and unclaimed orders divided by the number of orders.

What is positive unit economics? It's when each order (or each customer over their lifetime) leaves more money than it cost to get and fulfill. Then sales growth brings the business closer to profit.

Should fixed costs be included in unit economics? No, in the classic calculation only variable ones. Fixed costs are covered by the sum of the contribution margin from all orders. They are counted separately to find the break-even point.

How do unclaimed orders affect profit? Every unclaimed parcel means spend on advertising, packaging and often delivery with no revenue. So at the same traffic, a rise in unclaimed orders directly cuts the contribution margin.

Sources

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