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

$—

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

Gross Profit

Price − cost only

Net Profit

After all fees

Gross Margin %

Before platform fees

Net Margin %

After all fees

Markup %

Profit over cost

Revenue Breakdown per Unit
Product Cost
Platform Fee
Payment Fee
Net Profit
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.