Purchase Order Profitability Calculator
PO profit = order value minus every cost in the waterfall
Enter your numbers to see what the order actually nets.
TL;DR PO profit = order value − COGS − freight − duties − retailer fees − financing cost A well-run $1M order typically nets 15% to 25% after an all-in cost ratio of 75% to 85%.
Net profit
$200,000
Net margin
20.0%
The cost waterfall
| Line item | % of PO | $ |
|---|---|---|
| COGS | 62.0% | $620,000 |
| Freight | 5.0% | $50,000 |
| Duties & tariffs | 4.0% | $40,000 |
| Retailer fees & deductions | 6.0% | $60,000 |
| Financing cost | 3.0% | $30,000 |
| Total costs | 80.0% | $800,000 |
| Net profit | 20.0% | $200,000 |
The formula
Net profit = PO value − COGS − freight − duties − retailer fees − financing cost · Net margin = profit ÷ PO value
Worked example
A brand lands a $1,000,000 purchase order. COGS at 62% is $620,000, freight at 5% is $50,000, duties at 4% are $40,000, retailer fees and deductions at 6% are $60,000, and financing at 3% is $30,000. Total costs come to $800,000, leaving a net profit of $200,000, a 20% net margin.
Typical cost line ranges (indicative, as of Q3 2026)
| Line item | Typical range (% of PO) |
|---|---|
| COGS | 55% – 70% |
| Freight | 3% – 8% |
| Duties & tariffs | 0% – 10% depending on origin |
| Retailer fees & deductions | 4% – 10% |
| Financing | 2% – 4% per cycle |
Ranges are indicative and vary by category, retailer, and origin country. For preliminary planning only; not an offer of credit.
Frequently asked questions
How do I tell if a purchase order is worth financing?
Run the full waterfall including the financing cost. If the net margin after COGS, freight, duties, retailer fees, and financing is still healthy, commonly mid-teens or better, the order is worth taking with borrowed capital. If financing pushes the margin into single digits, renegotiate the price or the terms before signing.
What costs do brands forget when pricing a PO?
Deductions and chargebacks are the most common miss: shortages, damages, compliance fines, and promotional deductions routinely take 4% to 10% off the invoice. Freight surcharges, detention fees, and duty changes on imported goods are the other frequent surprises. Budget them up front instead of discovering them at settlement.
How does financing cost change the answer?
Purchase order and invoice financing typically costs 2% to 4% of the order per cycle as of Q3 2026. On a $1,000,000 PO that is $20,000 to $40,000, which turns a 20% unfinanced margin into roughly 16% to 18%. Financing makes sense when it lets you accept orders you otherwise could not fund.
What net margin is acceptable on a retail PO?
Mid-teens or better is the common benchmark after all costs, including financing. Some brands accept lower margins on strategic orders that open a new retailer or region, but repeated single-digit POs consume cash without building a durable business. Know your floor before the buyer call.