Calculate gross profit margin, net margin, and markup — and understand the difference between them
Margin vs. Markup: A 56% markup equals a 36.0% margin. They measure the same profit from different angles — margin uses revenue as the base, markup uses cost.
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<iframe src="https://sellertoolsonline.com/profit-margin-calculator?embed=1" style="width:100%;max-width:560px;height:750px;border:0;" title="Profit Margin Calculator" loading="lazy"></iframe> <p>Free <a href="https://sellertoolsonline.com/profit-margin-calculator">Profit Margin Calculator</a> by SellerTools Online</p>
Use this Profit Margin Calculator when you need to turn product cost and selling price into a clear margin decision. Enter revenue or sale price and cost of goods sold to calculate gross profit, profit margin percentage, and markup. The tool is built for ecommerce sellers, Amazon sellers, Etsy shops, Shopify stores, and small businesses checking whether a product price leaves enough room for platform fees, shipping, ads, returns, and overhead. Use the result to compare gross margin, net margin assumptions, and markup before changing prices or launching a new product.
If an item sells for $50 and costs $32, gross profit is $18 and profit margin is 36%. The calculator also shows the matching markup percentage.
Use the calculator again after adding platform fees, shipping, or ad cost to see how quickly gross margin turns into net margin.
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Profit margin connects selling price, product cost, gross profit, and markup into one pricing decision. This guide keeps the calculation practical for sellers who need to understand whether a product can support fees, shipping, ads, and overhead.
Enter the amount the customer pays before subtracting costs. For a product seller, this is usually the selling price. For a small business, it may be total revenue for a period. If you are checking a marketplace product, start with the sale price before Amazon, Etsy, eBay, Shopify, or payment fees are deducted.
Enter the direct cost tied to the sale. For ecommerce, include product cost, packaging, inbound freight, and any other cost of goods sold. Do not include broad overhead such as software, rent, or payroll if you are calculating gross margin. Add those later when estimating net margin.
Gross profit is selling price minus cost. If an item sells for $50 and costs $32, gross profit is $18. This dollar amount matters because every fee, shipping adjustment, ad cost, return, and discount will eventually come out of this profit pool.
Profit margin is profit divided by revenue. It answers how much of each sales dollar remains after direct cost. A product with $18 profit on a $50 sale has a 36% gross margin. Sellers use this number to judge whether the product can survive marketplace fees, ads, and shipping changes.
Margin and markup are not the same. Margin is based on selling price, while markup is based on cost. A 100% markup means a $10 cost becomes a $20 price, but the margin is 50%. This distinction matters when setting prices, reviewing supplier quotes, or comparing wholesale and retail economics.
Use the result before launching a product, accepting a discount, or copying a competitor's price. If the margin is too thin, check whether platform fees, fulfillment, packaging, or ads will erase profit. For marketplace-specific net profit, use the Amazon FBA, Etsy Fee, or eBay Fee calculators.
Profit margin is the percentage of revenue left after subtracting costs. For a product, gross profit margin usually means: (Selling Price − Cost of Goods Sold) ÷ Selling Price × 100. It shows how much room you have for fees, shipping, advertising, returns, and overhead.
Subtract cost from selling price to get profit, then divide profit by selling price. Example: if you sell an item for $50 and it costs $32, profit is $18. Profit margin is $18 ÷ $50 = 36%. This calculator performs that calculation and also shows markup.
Gross margin = (Revenue − Cost of Goods Sold) ÷ Revenue × 100. It only accounts for direct production or product costs. Net margin also subtracts all operating expenses — rent, software, marketing, salaries. For Amazon sellers, calculate net margin after all platform fees, FBA fees, and advertising costs — gross margin alone is misleading.
Margin is profit divided by revenue. Markup is profit divided by cost. Example: Cost $10, Sell $15. Margin = $5/$15 = 33.3%. Markup = $5/$10 = 50%. They look at the same profit from different angles. Retailers typically discuss markup; investors and accountants typically discuss margin. This calculator shows both simultaneously.
A good ecommerce margin depends on category, fulfillment method, and ad costs. Many product sellers look for enough gross margin to cover marketplace fees, shipping, advertising, returns, and overhead. For Amazon FBA, Etsy, or eBay, use the platform-specific fee calculators to check net profit after fees.
Four main levers: (1) Raise prices — even 5–10% more can significantly improve margin if conversion stays steady. (2) Reduce COGS — negotiate with suppliers, improve order quantity, or find alternative sources. (3) Optimize packaging — hitting a lower FBA size tier saves $1–5 per unit. (4) Reduce ad waste — improve ACoS by pausing low-converting keywords and targeting more specific terms.
Learn how landed cost, markup, margin, fees, and shipping affect product pricing in our product pricing guide.
