Margin vs markup — the key difference: Gross margin is profit as a percentage of your selling price (how much of every dollar you keep). Markup is profit as a percentage of your cost (how much you've added on top of what you paid). A product bought for $10 and sold for $15 has a 50% markup but only a 33% gross margin. This calculator shows both — plus net margin after platform and payment fees — so you can evaluate any product clearly and price it with confidence.
Platform:
Product Details

Pricing

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Platform & Payment Fees

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Gross Profit per Unit

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Fill in your product cost and selling price — results update live.

Gross Profit

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Price − cost only

Net Profit

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After all fees

Gross Margin %

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Before platform fees

Net Margin %

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After all fees

Markup %

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Profit over cost

Revenue Breakdown per Unit
Product Cost
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Platform Fee
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Payment Fee
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Net Profit
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Understanding Margin

What is product margin?

Product margin tells you what percentage of your selling price is actual profit — before or after fees depending on which margin you're measuring.

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Gross Margin %

The percentage of revenue remaining after subtracting only the product cost. It tells you how much room you have to cover fees, ads, and overhead before reaching net profit. Formula: (Price − Cost) ÷ Price × 100.

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Net Margin %

Gross margin minus platform fees and payment processing — the percentage of revenue you actually keep. This is the number that matters for evaluating whether a product is worth selling at scale.

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Why margin beats raw profit

A $10 profit sounds good. But on a $12 product it's an 83% margin — excellent. On a $200 product it's a 5% margin — barely viable. Margin normalises profit relative to price, making different products comparable.

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Target margins for ecommerce

Gross margins of 40–60% are a common target, leaving room for fees and ad spend. Net margins of 20–30% after all platform and payment fees are considered healthy for scaling with paid traffic.

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How fees erode margin

A 50% gross margin product on Amazon (15% fee + 2.9% payment fee) loses 17.9% of revenue to fees alone — shrinking net margin to ~32%. On eBay (13.25% + 2.7%) it drops to ~34%. Fees always eat gross margin first.

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Gross profit vs gross margin

Gross profit is the dollar amount you keep before fees: Price − Cost. Gross margin is that same profit expressed as a percentage of price. Both matter — dollar profit for absolute comparisons, margin for scalability analysis.


Key Distinction

Margin vs markup — what's the difference?

Margin and markup measure the same profit from two different angles. Confusing them leads to under-pricing — a common and costly mistake for new sellers.

Margin

Profit as % of selling price

(Price − Cost) ÷ Price × 100
Cost$20.00
Selling price$50.00
Gross profit$30.00
Gross margin60%

Margin is always lower than markup for the same product. Use it to compare profitability across products and set pricing floors.

Markup

Profit as % of cost

(Price − Cost) ÷ Cost × 100
Cost$20.00
Selling price$50.00
Gross profit$30.00
Markup150%

Markup is always higher than margin for the same product. Wholesale and manufacturing industries commonly use markup when setting trade prices.

Markup % Equals Margin % Example: cost $20 Sell price
25%20%$20 + 25%$25.00
50%33.3%$20 + 50%$30.00
100%50%$20 + 100%$40.00
150%60%$20 + 150%$50.00
300%75%$20 + 300%$80.00

Worked Example

Example margin calculation

A product costing $14 sold for $49.99 on Shopify with standard payment processing. Here's every number broken down.

Inputs

Selling price$49.99
Product cost (COGS)$14.00
Platform fee (Shopify 2%)$1.00
Payment fee (Stripe 2.9%)$1.45

Gross Figures

Gross profit$35.99
Gross margin %72.0%
Markup %257.1%

Net Figures

Gross profit$35.99
Platform fee−$1.00
Payment fee−$1.45
Net profit$33.54

Summary

Gross margin72.0%
Net margin67.1%
Fees as % of price4.9%
Fee impact on margin−4.9 pts

FAQ

Frequently asked questions

Common questions about margins, markup, and how platform fees affect your real product profitability.