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Profit margin calculator

What an item costs you and what you sell it for. The profit, the margin and the markup come out side by side, because confusing the last two is the most expensive mistake in pricing.
Gross margin
60%
Profit per item
US$60.00
Markup
150%

How it is calculated

Profit = selling price − cost.

Margin = profit ÷ selling price. It is the share of the price you keep, and it can never reach 100%.

Markup = profit ÷ cost. It is how much you added on top of the cost, and it has no ceiling: a 100% markup is only a 50% margin.

Questions

What is a good profit margin for an online shop?

It depends on what you sell. Commodity goods often run on gross margins under 30%; handmade, digital and private-label products commonly sit above 50%. The useful comparison is with your own costs after advertising, payment fees and returns — gross margin is only the start of that.

Is margin the same as markup?

No. Both use the same profit, but margin divides it by the price and markup by the cost. On a $40 item sold for $100, the margin is 60% and the markup is 150%.

Does this include VAT or sales tax?

Enter both figures without tax. Tax you collect for the government is not revenue, and including it overstates the margin.

If you run WooCommerce

WooFinance works this out for every order in a WooCommerce store, after payment fees, shipping, refunds and ad spend — the margin that is left when everything has been paid. WooFinance is our plugin; the calculator above works the same whether you use it or not.

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