Estimate Product Costs with a Margin Rule

A margin rule gives every product without a cost an estimated cost, calculated as a percentage of its selling price. Use it to get usable profit numbers on the first day, then replace the estimates with real costs over time.

Where: In the sidebar, open Product Costs and click the percent button next to Cost sync.
Who: Stores that do not have their real costs at hand yet, or that want a fallback for products without a cost.
Time: About 2 minutes.
Updates: You choose which orders get the estimates. They are recalculated in the background, usually in minutes.

How the Estimate Is Calculated#

The percentage you enter is the share of the selling price that counts as cost:

estimated cost = selling price × percentage

With a Global margin of 40%:

Product	Selling price	Estimated cost (40%)	Left for shipping, fees, ads and profit
Merino Wool Blanket	$95.00	$95.00 × 40% = $38.00	$57.00
Soy Candle	$12.00	$12.00 × 40% = $4.80	$7.20

The other 60% is your gross margin: what is left of the price after the product cost.

The Setup guide asks for the other side of the same number. Its dialog Estimate costs with a margin wants your Gross margin, the share you keep. A gross margin of 60% there is saved as a Global margin of 40% here.

Set Up a Margin Rule#

Each rule has a switch. A rule that is switched off stays saved but gives no estimates.

Example with a tag rule. Your Global margin is 40% and a tag rule for premium is 30%. A $120.00 product tagged premium and a $50.00 product without the tag get:

Tagged premium: $120.00 × 30%= $36.00
No tag: $50.00 × 40%= $20.00

Choose Which Orders Get the Estimates#

Recognize an Estimated Cost#

An estimated cost is marked wherever a cost is shown in detail:

Product Costs page. In the Source column the product row shows the margin badge
. Expand the product to see the percentage on each variant:
40
means 40% of the price. The All Sources filter has the entry Margin to list only estimated costs.
Order details. On the Costs tab of an order, the source reads Calculated from margin rule.

Replace an Estimate with a Real Cost#

The margin rule only fills variants that have no cost of their own. A cost you enter (How to Add Product Costs), import from a file (Import Product Costs from a CSV or Excel File) or sync from Shopify (Sync Product Costs with Shopify) always takes priority. As soon as a variant has a real cost, the margin rule no longer applies to it, and the badge in the Source column changes.

Start with the products that sell most. Use the All Statuses filter and Find Products Without a Cost (Cost Coverage) to find them.

Limits#

The estimate uses the selling price at the time you apply the rule. When you change a price later, open Margin rules again and apply with All orders to update the estimates.
Variants without a selling price get no estimate.
A margin rule does not set a handling cost.
The dashboard and the reports do not separate estimated costs from real ones. Estimates are only marked on the Product Costs page and in the order details.