How the profit margin calculator works
This tool takes your total cost base (product + shipping + other costs) and works backwards from your desired net margin to calculate the minimum selling price you need to charge. It also accounts for platform fees and taxes, which are often overlooked and silently destroy margins.
Markup vs. profit margin — what's the difference?
Markup is the percentage added on top of cost. If your cost is $10 and you sell for $15, your markup is 50%.
Profit margin is the percentage of the selling price that is profit. That same $15 sale on a $10 cost gives a 33.3% margin.
This distinction matters: a 50% markup sounds great until you realize platform fees and taxes eat into it, leaving you with far less than expected.
Why platform fees and taxes matter
Shopify Payments charges 2.9% + $0.30 per transaction. Amazon FBA fees vary from 8% to 15%. Mercado Livre charges up to 14%. If you price for a 30% gross margin without accounting for these fees, your actual take-home margin may be under 15%.
What is a good margin for ecommerce and dropshipping?
- Below 10% — Dangerous. No room for returns, ads or price cuts.
- 10–20% — Acceptable for high-volume, low-SKU stores.
- 20–40% — Healthy. Enough buffer for marketing and growth.
- 40%+ — Excellent. Typical of private-label or premium products.
Frequently asked questions
What is the difference between markup and profit margin?
Markup is calculated on the cost price (profit ÷ cost × 100). Profit margin is calculated on the selling price (profit ÷ selling price × 100). A 50% markup results in a 33.3% profit margin — always specify which one you mean when talking to suppliers or investors.
How do I calculate the selling price from cost and desired margin?
Use the formula: Selling Price = Total Cost ÷ (1 − Desired Margin%). For example, if your total cost is $10 and you want a 40% margin, the selling price is $10 ÷ 0.60 = $16.67. This calculator handles that automatically, including fees and taxes.
Should I include platform fees and taxes in my pricing?
Always. Platform fees (Shopify, Mercado Livre, Amazon) and taxes are deducted from your revenue, not your cost. Ignoring them means you are overstating your real margin. Enter them as percentages in the fields above to get an accurate selling price.
What is a good profit margin for dropshipping?
Dropshipping typically runs 15–25% net margin after fees and ads. Below 15% is risky because a single spike in ad costs or a return rate increase can wipe out profit. Aim for at least 20% to have room to scale with paid traffic.
Is my data saved or sent to a server?
No. All calculations run entirely in your browser. Nothing is stored, sent to a server, or shared with third parties.