Is your product worth selling online? Do the math first

Part 1 of 10 in Starting a Shopify store: the money side.

Plenty of good products make bad online businesses, and usually for a dull reason: the money left after one order is too small to pay for everything else. You can find that out in an afternoon, before you pay for a store.

You need three numbers.

1. What one order leaves you

Start with a single, typical order and follow the money. Here’s a worked example for a hand-poured candle that sells for $28:

$9.99 is your contribution per order: what each sale adds before the costs you’d pay anyway. Notice that postage is the second-biggest line. For small, heavy or fragile products it’s often the biggest.

Things people forget at this step:

• Free shipping isn’t free. If you don’t charge it, you pay it. Put the real postage in.
• Discounts. If you’ll run sales, use the price after your usual discount, not the full price.
• Breakage and returns. If 1 order in 30 comes back or arrives broken, add about a thirtieth of the order cost to every order.

2. What the store costs you each month

These are the costs you pay whether you sell or not: the Shopify plan, apps, a domain, an email tool. For a lean start that’s often somewhere between $35 and $80 a month. Part 2 goes through every line.

For the example, let’s say $55 a month.

3. How many orders close the gap

Divide the monthly cost by what one order leaves:

$55 ÷ $9.99 = 6 orders a month to cover the store.

Six candles a month to break even is a gentle bar. Order 7 onward is profit, before your time.

Now try the same thing with a smaller candle: $14, costing $4.50 to make, same postage and packaging. One order leaves −$0.71. No number of orders fixes that: every sale loses money, and selling more loses more.

What to do when the numbers don’t work

In this order, because the first fixes are the least painful:

1. Get two items into one box. Postage and packing are per order, not per item. A second $14 candle in the same box adds about $9 of profit and turns the order positive. That’s what bundles, quantity breaks and minimum orders are for.
2. Charge for shipping, or set a free shipping threshold above your average order instead of making it always free.
3. Raise the price. Small sellers almost always underprice. Part 3 covers how to price with room for discounts.
4. Lower the product cost: bigger material orders, a simpler package, a lighter jar.
5. Change the product: a bigger size, a set, a refill.

A quick pass/fail check

Before you build anything, you want honest “yes” answers to these:

• One typical order leaves a positive amount after product, postage, packing and fees.
• That amount is more than about a quarter of the order value, so a discount or a return doesn’t sink it.
• The number of orders a month you need to break even is one you can imagine reaching in a few months.
• You know how you’ll get the first 20 orders (friends, an existing following, markets, a community).

If you have those, the store is worth building. If not, the fix is in the numbers, not the website.

Next in the series: what a Shopify store really costs in year one.