Fixed costs include website hosting, platform subscription fees, warehouse rent, software tools, and salaried staff. These expenses are incurred regardless of sales volume and represent the minimum cost of keeping your online store operational.

Add up the product cost, shipping materials, payment processing fees (typically 2.5-3%), marketplace commissions, and any per-order fulfillment charges. This total per-unit cost is subtracted from your selling price to determine the contribution margin.

Returns increase your effective variable cost because you bear shipping, restocking, and potential product loss costs. Factor in your historical return rate by adding the average cost of returns to your per-unit variable cost for a more accurate analysis.