Quick answer
A product that costs $24 and sells for $49.99 makes $25.99 of profit per unit, a 52.0% gross margin and a 108.3% markup. Margin is measured on price, markup on cost, and confusing them is the classic pricing error. At 100 units the total profit is $2,599.
How the Profit Margin Calculator works, step by step
Enter your cost per unit and your selling price. The calculator subtracts cost from price to get profit per unit, then divides by the price to get the margin percentage. A $24 cost and a $49.99 price give $25.99 of profit, which is 52.0% of the price, so just over half of every sale is gross profit. Cost here means the full landed cost: product, freight and packaging, not just the supplier price.
Margin and markup describe the same profit from different sides. Markup divides profit by cost, so the same $25.99 of profit is a 108.3% markup on a $24 cost. Margin divides profit by price, so it can never reach 100%, while markup has no ceiling. Retailers usually talk margin; suppliers usually quote markup. A 100% markup is only a 50% margin, the conversion most pricing mistakes turn on.
The reverse mode answers the pricing question backwards: enter your cost and the margin you want, and the calculator gives the price that produces it. A 40% margin on a $24 cost needs a $40.00 price, not $33.60, because the margin is taken from the price, not added to the cost. Adding 40% to cost gives only a 28.6% margin, which is why the reverse mode exists.
The units field scales the result to a whole order or a month of sales. One unit at a 52.0% margin makes $25.99; 100 units make $2,599 of profit on $4,999 of revenue. Use it to test whether a thin margin still works at volume, or whether a high margin on tiny volume leaves too little total profit.
The verdict line judges the margin against what a business has to pay from it. Below 10% there is almost nothing left for platform fees, ads and overheads; 25% to 50% is workable for most e-commerce; above 50% there is real room to grow. Gross margin is before fees and ads, so a 52% gross margin can still end thin after a marketplace takes its cut.
The formula
Profit = selling price minus cost. Gross margin = profit divided by selling price, times 100. Markup = profit divided by cost, times 100. Target price for a margin = cost divided by (1 minus the target margin as a decimal).
Worked example — try it on the calculator above
Worked example: $24 cost, $49.99 price, 100 units sold
A product costs $24 landed and sells for $49.99. Profit per unit is $25.99. Gross margin is $25.99 divided by $49.99, or 52.0%. Markup is $25.99 divided by $24, or 108.3%. Over 100 units, revenue is $4,999 and total profit is $2,599. If the target were a 40% margin instead, the price would need to be $24 divided by 0.60, or $40.00, giving $16.00 of profit per unit. Adding 40% to the cost would only price it at $33.60, a 28.6% margin. Before spending on ads, subtract the marketplace fee from that $25.99: at a 15% referral fee the real profit is $18.49, a 37.0% net margin.
Frequently Asked Questions
What is a good profit margin for e-commerce?
It depends on the category and the fees. Gross margins of 25% to 50% are common in e-commerce, but the margin has to cover marketplace fees, payment processing, shipping and ads before it is real profit. A 50% gross margin can end below 20% net after a 15% marketplace fee and ad spend.
What is the difference between margin and markup?
Margin divides profit by the selling price; markup divides profit by the cost. A $24 product sold for $49.99 has a 52.0% margin and a 108.3% markup on the same $25.99 of profit. Margin can never reach 100%; markup has no ceiling. Mixing them up is the most common pricing error.
How do I price for a target margin?
Divide the cost by one minus the margin as a decimal. For a 40% margin on a $24 cost, divide $24 by 0.60 to get $40.00. Adding 40% to the cost instead gives $33.60, which is only a 28.6% margin. The reverse mode on this calculator does the division for you.
Does margin include shipping and fees?
Only if you include them in the cost. The calculator's cost field should hold the full landed cost: product, freight, packaging and any per-unit fee you always pay. Marketplace percentage fees and ad spend come out of the margin afterwards, which is why the fee calculators on this site exist.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.