Profit Margin Calculator

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Profit Margin Calculator

Calculate your profit margin, markup, and profit per unit instantly. Compare up to 3 products side-by-side.

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How to Calculate Profit Margin

Profit margin measures what percentage of your revenue is actual profit. It tells you how much money you keep from every dollar of sales after covering costs.

The formula: Profit Margin = ((Selling Price – Cost) / Selling Price) x 100

For example, if a product costs $10 and sells for $25: Margin = (($25 – $10) / $25) x 100 = 60%.

Margin vs Markup: The Key Difference

Margin and markup both measure profitability but from different bases. Margin divides profit by selling price. Markup divides profit by cost price. A 50% markup only gives you a 33.3% margin.

Markup %Margin %Example ($10 cost)
25%20%Sell at $12.50
50%33.3%Sell at $15.00
100%50%Sell at $20.00
150%60%Sell at $25.00
200%66.7%Sell at $30.00

Good Profit Margins by Industry

IndustryTypical MarginNotes
Food & Beverage25-40%Higher for DTC, lower wholesale
Beauty & Skincare55-80%Premium brands can exceed 80%
Supplements50-70%High margin but competitive
Apparel45-65%Season-dependent
Electronics15-30%Volume-driven

Frequently Asked Questions

What’s a good profit margin for e-commerce?

Most healthy e-commerce businesses operate at 20-40% net margin. DTC brands with premium products can reach 50-70%. Below 15% makes it hard to cover marketing and overhead.

What’s the difference between gross and net profit margin?

Gross margin only subtracts direct product costs (COGS). Net margin subtracts everything: shipping, marketing, overhead, taxes. This calculator shows gross margin per unit.

How do I increase my profit margin?

Three levers: raise price (test with small increases), reduce COGS (negotiate suppliers, optimize packaging), or reduce variable costs (better shipping rates, less returns).

Should I include shipping in my cost price?

Yes. Your landed cost (product + shipping to warehouse + duties) is the true cost. Using just manufacturing cost overstates your margin.

How does marketplace commission affect margin?

Amazon charges ~15% referral + FBA fees. Shopify has payment processing (~2.9%). Include these in your cost or calculate margin on the net received amount.

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