InTrendz MediaSystem: nominal

Lab // Unit Economics and Measurement

Calculating ecommerce margin in Canada after GST, HST and duties

By Kartikeya AwasthiPublished 1 min read
The short answer

Ecommerce margin in Canada should be calculated on the price before sales tax, after product cost, shipping, duties and payment fees. Sales tax you collect belongs to the government, so counting it as revenue overstates margin and makes your break-even ROAS look lower than it really is.

Key takeaways
  • Exclude collected tax from revenue.
  • Include duties and cross-border shipping.
  • Use net margin for ad targets.

Start with a clean price

A tax-inclusive price of $113 in Ontario contains $13 of HST. Revenue for margin purposes is $100. Using $113 would overstate margin by 13 percent.

What to count for Canadian sellers

Worked example

A product sells at $100 before tax. Product cost is $35, freight and duty $8, shipping $9 and payment fees $3. Direct cost is $55, so margin is 45% and break-even ROAS is 2.22.

Convert currencies once

Choose one reporting currency and convert at a consistent rate, such as a monthly average. Mixed currencies make campaign comparisons unreliable.

Free tool / Accounting

What is the difference between margin and markup?

Margin vs Markup Calculator

Questions about Unit Economics and Measurement

Should I include the marketing cost in margin?

Gross margin excludes marketing. Break-even ROAS covers that step.

Do returns change margin?

Yes. Subtract refunds from revenue and count return shipping.

Is this tax advice?

No. Check rules with a Canadian accountant.

Key terms

Written by

Kartikeya Awasthi, Co-founder, InTrendz Media

Kartikeya has 12 years of experience across Accenture, EY, Coforge and other enterprises. He holds an MBA from NMIMS Mumbai and has received CII National Gold and Silver awards for AI and Industry 4.0 work. He writes and reviews every Growth Lab article. More about the author

How we write and review

Keep reading

Article

CAC payback period: how to calculate it and what to aim for

Read
Service

Performance marketing run on adstock and saturation curves

View service