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Shays Tools

Minimum Order Value Calculator

Work out the order value that covers the costs you absorb on each order and leaves the contribution you want.

The share of the selling price left after the cost of the goods.

Fees charged as a percentage of the order value.

Enter 0 to see break-even only.

To compare your average order with the minimum.

Fixed costs for each order

Costs that are the same whatever the order is worth. Leave any you do not have empty.

Only the part the customer does not pay.

A flat amount for each order, not a percentage.

Gross margin is measured against the selling price; markup is measured against cost. Something bought for £6 and sold for £10 has a 40% margin and a 67% markup. Enter the margin before the percentage fees and fixed order costs above.

Enter each fee once: a percentage charge in “Payment and platform fees”, a flat charge in “Fixed transaction fee”.

If the customer pays some delivery cost, enter only the amount your business actually absorbs.

Use margin and fees as percentages of the same order value, for example both excluding VAT.

Changes the symbol only. No exchange rates are applied.

Your result

Result

Orders need to reach at least £27.50 to generate your £4 target contribution under these assumptions.

Your current average order is £5.50 below that threshold.

Minimum order value
£27.50
Break-even order value
£17.50
Left after percentage fees
40.0%
Fixed costs per order
£7.00
Contribution at your average order
£1.80
Average order against the minimum
£5.50 below

Smaller and larger orders

What an order contributes at different values, after the fees and costs you’ve entered.

  • Order value: £13.75

    Contribution
    £1.50 loss
    Against your target
    £5.50 below

  • Order value: £17.50 (break-even)

    Contribution
    £0.00
    Against your target
    £4.00 below

  • Order value: £20.63

    Contribution
    £1.25
    Against your target
    £2.75 below

  • Order value: £22.00 (your average order)

    Contribution
    £1.80
    Against your target
    £2.20 below

  • Order value: £27.50 (the minimum)

    Contribution
    £4.00
    Against your target
    On target

  • Order value: £34.38

    Contribution
    £6.75
    Against your target
    £2.75 above

  • Order value: £41.25

    Contribution
    £9.50
    Against your target
    £5.50 above

Each row is worked out from the order value shown. A loss means the order does not cover the costs entered.

What this means

Your 42% gross margin less 2% in percentage fees leaves 40% of each order’s value.

Fixed costs of £7 come out of every order, whatever its size.

An order of £17.50 covers those costs and no more. That is order-level break-even.

An order of £27.50 also leaves the £4 you want. That is your own target, not a measure of overall profit.

At £22, an average order contributes £1.80.

This compares your average only. Individual orders will be above and below it.

Returns, refunds, discounts and free-delivery offers are not included.

Contribution is what remains from an order after the costs and fees you’ve entered. It isn’t your overall profit — overheads and other business costs may still need to be covered.

How the result is worked out

The calculator works out how much of an order’s value is left after percentage fees, then how big an order has to be for that to cover the fixed costs of the order and leave the contribution you want.

What is left from an order

  1. Left after percentage fees = gross margin − percentage fees
  2. Fixed costs per order = the five fixed costs added together
  3. Contribution from an order = order value × left after percentage fees − fixed costs per order

Gross margin is the share of the selling price left after the cost of the goods, before order fees and overheads. It is measured against the selling price. Markup is measured against cost, so the same product has a higher markup than margin.

The minimum and break-even order values

  1. Minimum order value = (fixed costs per order + contribution you want) ÷ left after percentage fees
  2. Break-even order value = fixed costs per order ÷ left after percentage fees

Break-even is where an order covers its own costs and no more. The minimum order value also leaves the contribution you asked for. Both are minimums, so they are rounded up to the next penny and never fall short.

If percentage fees are equal to or higher than the gross margin, nothing is left from an order’s value, so no order value can cover a cost or reach a target and no minimum is given.

Smaller and larger orders

A table shows the contribution from orders at half, three-quarters, one and a quarter times, and one and a half times the minimum, with the break-even order value and your average order if you entered one. Each row is worked out from the order value shown.

If you enter your average order value

  1. Contribution at your average order = average order value × left after percentage fees − fixed costs per order
  2. Average order against the minimum = minimum order value − average order value

This compares your average only. Individual orders will be above and below it.

Worked example

A shop has a 42% gross margin on its products and pays 2% of each order in payment fees. Each order costs £2.00 to pick and pack, £0.80 in packaging, £3.50 in delivery the shop absorbs, a £0.20 fixed transaction fee and £0.50 in other costs. The shop wants £4 of contribution from each order.

What is left from an order

42% − 2% leaves 40% of each order’s value. The fixed costs add up to £2.00 + £0.80 + £3.50 + £0.20 + £0.50 = £7.00 an order.

The minimum and break-even order values

The minimum order value is (£7.00 + £4.00) ÷ 40% = £27.50. An order of £27.50 keeps £11.00, which pays the £7.00 of fixed costs and leaves £4.00. Break-even is £7.00 ÷ 40% = £17.50: an order of £17.50 keeps £7.00, which pays the fixed costs and leaves nothing.

Smaller and larger orders

An order of £15 keeps £6.00 and loses £1.00. An order of £20 contributes £1.00, £25 contributes £3.00, £30 contributes £5.00, £40 contributes £9.00 and £50 contributes £13.00.

The average order

If the shop’s average order is £22, it contributes £22 × 40% − £7.00 = £1.80, and it is £27.50 − £22 = £5.50 below the minimum.

Assumptions and limits

  • The result covers the costs and fees you enter for one order. It does not include overheads such as rent, salaries or marketing, so reaching the minimum order value does not mean the business as a whole is profitable.
  • Break-even here means one order covering its own costs. The contribution you ask for is your own target. Neither is a measure of overall profit.
  • One gross margin is used for every order. If different products have different margins, the real figure depends on what is in the basket.
  • Percentage fees are taken from the same order value as the gross margin. If your provider charges its percentage on a different amount, for example a total including VAT or delivery the customer pays, adjust the percentage you enter.
  • Enter each fee once: percentage charges in the percentage field, flat charges in the fixed transaction fee.
  • The fixed costs are treated as the same for every order. Costs that rise with the number of items or the weight of the parcel are not modelled.
  • Returns, refunds, discounts and free-delivery offers are not included. If you only absorb delivery above a certain order value, the result does not allow for that.
  • An average order value is one number. Individual orders will be above and below it.
  • Use margin and fees as percentages of the same order value, for example both excluding VAT.
  • The currency setting changes the symbol only. It does not convert between currencies.
  • Results are a planning aid based on the figures you enter. They are not financial or accounting advice.

Formula version 1.0.0. Your figures are worked out in your browser and are not sent to us or stored.