I priced with the calculator, but my actual profit at month end is below the target margin; why?

The calculator was right; the inputs were incomplete

The Selling-price calculator prices one order holding one product, using the cost, shipping and fees you typed, and assumes percentage fees are charged on the selling price and that prices exclude tax. Anything outside those assumptions never shows up in the result. The gap between plan and reality usually has a specific cause, and it can be traced.

The checklist

• Rounding down: did 100 become 99 on the product page? The margin falls to about 19.24%.
• Coupons and discounts: 10% off a price of 100 means 90 paid, profit 10.50 and a margin of about 11.67%.
• Fees on a different base: commission charged on price plus shipping or tax is bigger than what you entered.
• VAT counted as income: compare tax-inclusive receipts with the margin and the numbers will never match.
• Returns: return shipping and items you cannot resell are a cost across all orders.
• Ads: if orders come from campaigns, each one carries a cost the price never included.
• Orders with several pieces, or shipping to some cities costing more than assumed.

Finding the cause with numbers

1. Total the month's real expenses by type: shipping, fees, ads, returns. The Expense summary generator helps you group them by category and month.
2. Divide each line by the number of orders to get its average per order.
3. Compare with what you entered in the calculator. The line you left out, or entered too low, is the source of the gap.

Once you find the cause

Not every cause is fixed by raising the price. Rounding is fixed by choosing a higher price ending, coupons by working out the list price from the post-discount price, and returns sometimes by a more accurate product description that cuts them. Real recurring costs belong in fixed fees. After each change, confirm the real margin on an actual order with the Profit margin calculator.