Profit Margin & Markup Calculator

Calculate gross profit, percentage margin, markup, and optimal retail pricing for e-commerce, Amazon FBA, and retail.

Margin vs. Markup Cheat Sheet

Frequently Asked Questions

• What is the difference between profit margin and markup? +

  Profit margin is the percentage of total selling price that represents profit: (Profit ÷ Revenue) × 100. Markup is the percentage added to the original cost of the product to reach that price: (Profit ÷ Cost) × 100. For example, buying an item for $50 and selling it for $100 yields a 50% margin and a 100% markup.

• What is considered a healthy profit margin in e-commerce? +

  Average e-commerce gross profit margins generally range between 35% and 55%. Net profit margins (after marketing, fulfillment, payment processor fees, and overhead) typically fall between 10% and 20% for established online stores.

• How do you calculate selling price from a target profit margin? +

  To calculate target selling price, divide your product cost by (1 minus your target margin in decimal). For example, if a product costs $40 and you want a 60% margin: $40 ÷ (1 - 0.60) = $40 ÷ 0.40 = $100 selling price.

• Can profit margin ever exceed 100%? +

  No. Profit margin is expressed as a fraction of selling price. Since your gross profit cannot exceed your total sales price (unless cost was negative), margin cannot exceed 100%. Markup, however, can easily exceed 100%, 200%, or more.

• How should Amazon FBA and Shopify fees be accounted for? +

  When calculating true e-commerce margins, add marketplace referral fees (typically 15% on Amazon), FBA pick & pack fees, payment gateway fees (2.9% + $0.30 on Shopify), and average customer return rates directly into your Total Cost basis.