Ecommerce & Revenue
Profit Margin Calculator
Margin and markup get used interchangeably in meetings and they are not the same thing, which is how products get priced into a loss. Enter your price and cost to get both, plus what the volume is actually earning you.
Result
FormulaGross margin % = (price − cost) ÷ price × 100
Worked example
An $89 product costing $34 earns $55 per unit, a 61.8 percent gross margin. Across 1,500 units that is $82,500 of gross profit. Note that the same product carries a 161.8 percent markup, and confusing those two numbers is how a 50 percent markup gets mistaken for a 50 percent margin, which is really only 33 percent.
What to watch for
Load your unit cost properly. Landed cost including freight, duties, payment processing and returns is often 15 to 30 percent above the invoice price from the supplier, and margins built on the invoice price alone tend to disappear at the end of the quarter.
Margin sets your acquisition ceiling. A 60 percent margin business can pay far more for a customer than a 25 percent one, so I always price the media plan after the margin is settled, never before.
If a hero product sits below roughly 30 percent gross margin, it needs a strategic reason to exist, such as reliably pulling higher-margin attachments or repeat orders. Otherwise it is buying revenue with profit.
Frequently asked questions
What is 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. A product bought at $50 and sold at $100 has a 50 percent margin and a 100 percent markup, and the two numbers are never interchangeable.
Should returns be included in the unit cost?
Yes, as an averaged allowance. If 8 percent of orders come back and half of those cannot be resold, that loss is a real cost of selling the product and should sit in your unit economics rather than as a surprise line at year end.
Read next
You might also like
Ranked by how closely each page overlaps with this one, using a similarity model over the whole library.
More Ecommerce & Revenue calculators
Average Order Value Calculator
Calculate average order value from revenue and orders, and see what a higher AOV target is worth on the same order volume.
Cart Abandonment Calculator
Calculate cart abandonment rate, lost revenue from abandoned carts, and how much of it a recovery flow could realistically bring back.
Markup Calculator
Turn cost and markup percentage into a selling price, and convert markup to the true gross margin it produces. Free, no signup.
Discount Impact Calculator
See what a discount does to your margin and how many extra units you must sell to end up with the same gross profit.
Break-Even Units Calculator
Calculate break-even units and revenue from fixed costs, price and variable cost per unit, plus contribution margin per unit.
Revenue Forecast Calculator
Project revenue forward at a compounding monthly growth rate, with total revenue over the period and the resulting growth multiple.
This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.