E-commerce Profit Sensitivity Analysis

This modeled analysis answers a practical question: when refunds, advertising cost, or product cost move, how do expected profit, margin, and advertising break-even thresholds move with them?

Every row is generated by the same deterministic engine behind the E-commerce Profit Calculator. These are scenarios under stated assumptions—not observed merchant results or industry averages.

Baseline assumptions

The baseline matches the calculator's published example input—a modeled scenario for this analysis, not an industry default or a recommended seller configuration: selling price $50.00, shipping revenue $0.00, product cost $15.00, fulfillment $5.00, packaging $1.00, payment processing 2.9% + $0.30, platform fee 0.0%, advertising $12.00 per order, refund rate 5.0%, and conservative return assumptions (100% of product, fulfillment, and fee costs lost on refunded orders).

Under that baseline, the calculation shows expected profit per order of $12.75, expected margin 26.8%, break-even CPA $24.75, and break-even ROAS 1.92x.

Refund rate scenarios

Only the refund rate changes. Higher refund rates reduce expected retained revenue and increase expected loss on unsuccessful orders, so expected profit and margin fall. Break-even CPA also tightens because pre-ad contribution is an expected-value mix of successful and refunded orders.

Modeled refund-rate sensitivity (other inputs held at baseline)
Scenario	Expected profit / order	Expected margin	Break-even CPA	Break-even ROAS	Δ vs baseline profit
0% refund rate	$15.25	30.5%	$27.25	1.83x	$2.50
5% refund rate	$12.75	26.8%	$24.75	1.92x	$0.00
10% refund rate	$10.25	22.8%	$22.25	2.02x	-$2.50
15% refund rate	$7.75	18.2%	$19.75	2.15x	-$5.00

Advertising cost scenarios

Only advertising cost per order changes. Expected profit moves nearly dollar-for-dollar with ad cost under these assumptions, but break-even CPA stays the same: that threshold is solved from pre-ad contribution, before advertising is subtracted. What changes is whether your actual CPA clears the unchanged break-even line.

Modeled advertising-cost sensitivity (other inputs held at baseline)
Scenario	Expected profit / order	Expected margin	Break-even CPA	Break-even ROAS	Δ vs baseline profit
$6 advertising / order	$18.75	39.5%	$24.75	1.92x	$6.00
$12 advertising / order	$12.75	26.8%	$24.75	1.92x	$0.00
$18 advertising / order	$6.75	14.2%	$24.75	1.92x	-$6.00
$24 advertising / order	$0.75	1.6%	$24.75	1.92x	-$12.00

Product cost scenarios

Only product cost changes. Higher COGS reduces expected profit and margin and lowers maximum affordable CPA, because less contribution remains before ads.

Modeled product-cost sensitivity (other inputs held at baseline)
Scenario	Expected profit / order	Expected margin	Break-even CPA	Break-even ROAS	Δ vs baseline profit
$10 product cost	$17.75	37.4%	$29.75	1.60x	$5.00
$15 product cost	$12.75	26.8%	$24.75	1.92x	$0.00
$20 product cost	$7.75	16.3%	$19.75	2.41x	-$5.00
$25 product cost	$2.75	5.8%	$14.75	3.22x	-$10.00

Combined stress scenarios

Real catalogs often move more than one lever at once. These two combinations keep the same baseline structure but stack adverse inputs. The calculation shows how quickly expected profit can compress when ads and refunds—or ads and COGS—worsen together.

Modeled combinations vs baseline
Scenario	Expected profit / order	Expected margin	Break-even CPA	Break-even ROAS	Δ vs baseline profit
$18 ads + 10% refund rate	$4.25	9.4%	$22.25	2.02x	-$8.50
$20 product cost + $18 ads	$1.75	3.7%	$19.75	2.41x	-$11.00

What sellers can take from this

Refund rate is not a soft afterthought: under these loss assumptions it hits both expected revenue and expected costs.
Rising ad CPA hurts profit immediately, but the break-even CPA number itself only moves when non-ad economics change.
Product cost and ads compound: the combined scenarios are weaker than either lever alone.

Limitations

Results are planning estimates from the disclosed model. They are not forecasts of your store. Taxes, subscriptions, and custom agreements are outside this page. Details are on methodology.