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Profit Margin Calculator
Enter your cost price and selling price to instantly calculate profit margin, markup percentage, and profit per unit. Compare up to 3 products side-by-side.
How to Use This Calculator
1. Enter your cost price
Your landed cost per unit including materials, manufacturing, packaging, and shipping to warehouse.
2. Set markup or selling price
Enter a markup % and the selling price calculates automatically. Or enter the price directly and markup adjusts.
3. Read your results
See margin %, markup %, profit per unit, and profit at scale instantly. Green = healthy (40%+), amber = moderate, red = low.
How to Calculate Profit Margin
Profit margin measures how much of each dollar in revenue you keep as profit. It is the most important number in product economics because it tells you whether your pricing is sustainable.
The formula: Profit Margin = ((Selling Price – Cost) / Selling Price) x 100
Example: If your product costs $8.50 to make and you sell it for $24.99:
- Profit = $24.99 – $8.50 = $16.49
- Margin = ($16.49 / $24.99) x 100 = 65.99%
- That is a healthy margin for most product categories
Margin vs Markup: The Key Difference
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. They are related but not interchangeable. A 50% markup gives you only a 33.3% margin.
| Markup % | Margin % |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
What is a Good Profit Margin?
It depends on your category and channel, but here are general benchmarks for physical products:
| Channel | Target Margin |
|---|---|
| Direct-to-Consumer (DTC) | 60-80% |
| Amazon / Marketplace | 30-50% |
| Wholesale | 40-60% |
| Retail (in-store) | 50-65% |
Remember: marketplace fees (Amazon 15%, Shopify payments 2.9%) come out of your margin. Always calculate your net margin after channel costs.
Calculated your margins? Now validate your pricing.
Our Market Research Agent tests your price points against 250+ modelled shoppers. Find the price that maximises both revenue and purchase intent.
Frequently Asked Questions
Profit margin is the percentage of revenue that remains as profit after subtracting costs. It is calculated as: (Selling Price – Cost) / Selling Price x 100. A 60% margin means you keep $0.60 of every dollar in revenue.
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A 100% markup (doubling your cost) gives you a 50% margin. They are related but not the same, so always clarify which one you are using.
For DTC brands selling online, aim for 60-80% gross margin to cover advertising, returns, and platform fees. For Amazon sellers, 30-50% after FBA fees is typical. Wholesale margins are usually 40-60%.
Three levers: (1) Reduce costs by negotiating with suppliers, optimizing packaging, or increasing batch sizes. (2) Increase prices by testing higher price points or adding perceived value. (3) Change channel mix by selling more through higher-margin channels like DTC vs. wholesale.
Yes, use your fully landed cost (COGS + freight + duties + packaging). This gives you a true picture of profitability. If you offer free shipping to customers, that is a marketing cost that further reduces your effective margin.
Green (40%+) means a healthy margin with room for marketing and growth. Amber (20-39%) is moderate and may struggle after channel fees. Red (below 20%) is dangerously thin and likely unprofitable after all costs are counted.
Yes. Enter a product cost and price, click Compare Product to save it to the comparison table, then enter your next product. You can compare up to 3 products side-by-side to see which has the best margins.
Add marketplace fees to your cost price before calculating. For Amazon: add the referral fee (typically 15%) and FBA fees to your COGS. For Shopify: add payment processing (2.9% + $0.30). This gives you your true net margin.
A negative margin means you are losing money on every sale. This happens when your cost exceeds your selling price. Either increase your price, find cheaper suppliers, or discontinue the product. No amount of volume fixes a negative margin.
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