Margin Calculator: Profit Margin, Markup and Price
A free margin calculator and profit margin calculator for online sellers. Enter cost and selling price to get your margin and markup, compare gross vs net margin, or find the price for a target margin. VAT is optional.
Enter cost and selling price to get the margin, the markup and the profit per unit.
Margin
60%
Profit as a % of the selling price
Markup
150%
Profit as a % of the cost
- Profit per unit
- $60.00
A healthy margin, right in the typical e-commerce range of 40 to 60%.
How to calculate margin
Margin tells you how much of every dollar of revenue you keep. Subtract the cost from the selling price to get your profit, divide that profit by the selling price and multiply by 100. A product that costs $40 and sells for $100 earns $60 of profit, a 60% margin.
Always use the price without sales tax or VAT. VAT is collected for the government, so it is not revenue. If your shop shows prices with VAT, switch on the VAT option and the calculator takes the VAT out before it works out the margin.
To price for a margin, turn the formula around: price = cost / (1 - target margin). A $40 product needs an $80 price for a 50% margin and a $100 price for 60%.
Margin vs markup
Margin and markup both start from the same profit: selling price minus cost. They differ in what you divide that profit by. That is why the same product has a 60% margin and a 150% markup at once.
Margin
(price - cost) / price x 100Profit as a share of the selling price. Accountants, marketplaces and pricing reports use margin. It can never reach 100%.
Markup
(price - cost) / cost x 100Profit as a share of the cost. Buyers often price with markup because it starts from the purchase price. It has no upper limit.
| Markup | Margin |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20% |
| 30% | 23.08% |
| 40% | 28.57% |
| 50% | 33.33% |
| 60% | 37.5% |
| 75% | 42.86% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.67% |
| 300% | 75% |
Worked examples
1. Margin from cost and price
A phone case costs you $6 and sells for $19.99. The profit is $13.99. The margin is 13.99 / 19.99 = 69.98% and the markup is 13.99 / 6 = 233.17%.
2. Gross vs net margin
A jacket costs $40 and sells for $100, a 60% gross margin. Shipping ($7), payment fees ($3) and ad spend per sale ($15) add $25, so the net profit per unit is $35 and the net margin 35%.
3. Price from a target margin
You want a 45% margin on a product that costs $22. The price is 22 / (1 - 0.45) = $40.00. A 45% markup would give $31.90 instead, which is only a 31.03% margin.
Gross margin vs net margin
Gross margin only takes the cost of goods off the selling price. It is the number suppliers, marketplaces and most pricing reports compare, and it is what the Margin mode shows.
Net margin per unit also subtracts what it costs to sell that unit: shipping, payment and marketplace fees, ad spend and returns. A product with a 50% gross margin can end up near 10% once those are in. Accountants use net profit margin for the whole business after overhead and tax, so keep the per-unit number for pricing decisions.
Set prices from cost for your whole catalog
This calculator handles one product. In WISEPIM you store a cost price on every product, and the Pricing & Margins rules work out channel prices from it automatically.
- Cost plus markup or cost plus margin rules, per channel and with values per brand, supplier, family or category.
- A minimum margin safeguard, so no exported price drops below the floor you set.
- Rounding to whole amounts or .99 and .95 price endings.
Embed this calculator
Add this free calculator to your own website or blog. Paste the code where you want it to show. It works on any page that accepts HTML.
<iframe src="https://wisepim.com/embed/tools/profit-margin-calculator?lang=en" title="Margin calculator" width="100%" height="720" loading="lazy" style="border:0;max-width:760px"></iframe>
<p style="font-size:13px">Powered by <a href="https://wisepim.com/tools/profit-margin-calculator">WISEPIM</a></p>Free to use. Keep the Powered by WISEPIM link visible below the calculator.
You found the margin on one product.
WISEPIM calculates true margin for every product in your catalog, factoring in cost, returns and channel fees, and surfaces the items quietly losing you money. No spreadsheets.
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Frequently asked questions
How do I calculate margin?
Margin = (selling price - cost) / selling price x 100. Subtract what the product costs you from what you sell it for, divide by the selling price and multiply by 100. A $40 item sold for $100 has a $60 profit and a 60% margin.
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. The same $40 item sold for $100 has a 60% margin but a 150% markup. Marketplaces, accountants and most pricing tools mean margin, so lead with that number.
What is the difference between gross margin and net margin?
Gross margin only subtracts the cost of goods. Net margin per unit also subtracts the other costs of selling that unit, such as shipping, payment fees, marketplace commission, ads and returns. Use the gross vs net mode to see both side by side.
How do I work out the selling price for a target margin?
Divide your cost by (1 minus the target margin as a decimal). For a 50% margin on a $40 item: $40 / (1 - 0.50) = $80. For 60%: $40 / 0.40 = $100. The price from target margin mode does this for you and rounds the price to the cent.
Should I calculate margin with or without VAT?
Without. VAT is collected for the tax office, so it is not revenue. If your shop prices include VAT, switch on the VAT option: the calculator takes the VAT out of the selling price first, for example 21% in the Netherlands or 19% in Germany, and works out the margin on the net price.
What is a good profit margin for e-commerce?
It varies by category, but many online retailers target a gross margin of 40 to 60%. Lower-margin categories such as electronics often run 10 to 25%, while private label and beauty can exceed 70%. Compare against your own category and factor in returns and ad spend.
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