See Profit on Ad Spend vs revenue-only reporting
Profit Bid connects store costs to ad spend so you bid on margin — not vanity Return on Ad Spend.
Where margin leaks on free-shipping orders
- COGS48%
- Shipping subsidy22%
- Fees & packaging12%
- Gross profit18%
On subsidized orders, shipping can consume more profit than product margin.
Track Profit on Ad Spend automatically from your store — upload profit conversions and scale winners with A/C/X labels.
The shipping subsidy formula
Gross profit for Profit on Ad Spend = product revenue − COGS − payment fees − max(0, actual shipping cost − shipping revenue from customer).
A $90 order with $12 subsidized shipping and 45% margin can show 250% Return on Ad Spend but sub-80% Profit on Ad Spend.
Fixes that preserve conversion
You do not always remove free shipping — you align ads with economics.
- Raise free-shipping threshold where Profit on Ad Spend data supports it.
- Exclude ultra-heavy SKUs from broad Shopping/PMax.
- Use geographic bid modifiers where zones destroy margin.
- Bundle shipping-friendly SKUs in creative and landing pages.
Frequently asked questions
Common questions about this topic — tap to read answers.
Flat-rate shipping?
Use actual carrier cost by weight/zone when possible. Flat-rate averages hide outliers that ads scale hardest.
Does Profit Bid calculate this automatically?
Yes — configure shipping rules once. Profit on Ad Spend updates per order with the subsidy applied.
