Free Tool
Profit Margin Calculator
Enter what a product costs you and what you sell it for. You get the profit per unit, your gross margin, and your markup — the three numbers sellers mix up most often.
Your selling price is below your cost price — every sale loses money before ads, fees, or shipping even enter the picture.
Margin vs markup — they are not the same number
Gross margin = (Selling Price − Cost) ÷ Selling Price × 100. It is your profit as a share of the money coming in. Markup = (Selling Price − Cost) ÷ Cost × 100 — your profit as a share of what you spent. A product that costs $20 and sells for $50 has a $30 profit, a 60% margin, and a 150% markup. Same product, same profit, two very different percentages.
The mix-up gets expensive when a supplier quotes you a "50% markup" and you hear "50% margin." A 50% markup on a $20 cost gives a $30 price and only a 33% margin. If your ad costs were planned around a 50% margin, the campaign math falls apart before it starts. When we price products for client stores, we always work from margin, because margin is the slice of revenue available to cover ads, fees, and everything else.
One honest caveat: this is gross margin on the product itself. It does not subtract marketplace fees, payment processing, returns, or your time. Treat the result as the ceiling your real profit lives under, and fold order-level costs in when you calculate your break-even ROAS.
Quick answers
What margin should I aim for? For physical products sold with paid ads, most stores we work with need at least 50–60% gross margin to leave room for acquisition costs. Pure digital products can run far higher; commodity reselling often runs lower and survives on volume.
How do I price from a target margin? Divide your cost by (1 − margin). For a 60% margin on a $20 cost: 20 ÷ 0.4 = a $50 selling price.