Free Tool
Profit Margin Calculator
Calculate gross profit margin, net profit margin, and markup for your e-commerce products.
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Formula
Profit Margin = ((Selling Price − Cost) ÷ Selling Price) × 100
What is Profit Margin?
Profit margin is the percentage of revenue that remains as profit after accounting for costs. For e-commerce sellers, understanding your margins on every product is critical for pricing, advertising, and growth decisions.
There are two main types: Gross Profit Margin (revenue minus product cost) and Net Profit Margin (revenue minus all costs including shipping, ads, and overhead).
Margin vs Markup — What's the Difference?
These are often confused but they are calculated differently:
- Margin: Profit as a percentage of selling price (e.g., 40% margin = $40 profit on a $100 item)
- Markup: Profit as a percentage of cost (e.g., 67% markup = cost $60, selling price $100)
A 50% margin ≠ 50% markup. A 50% margin = 100% markup.
E-commerce Profit Margin Benchmarks
- Dropshipping: 15% – 30%
- Private Label: 40% – 70%
- Handmade/Custom: 50% – 80%
- Wholesale/Retail: 25% – 50%
- Digital Products: 80% – 95%