Profit Margin Calculator
Calculate gross and net margins for your ecommerce products — including shipping and advertising costs. Compare up to 10 products in batch mode.
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Margin Breakdown
Understanding Profit Margins in Ecommerce
Profit margin tells you what percentage of your selling price is actual profit. For ecommerce sellers, it's critical to understand both gross margin (price minus COGS) and net margin (after all costs including shipping, ads, and platform fees).
Many new e-commerce merchants only track gross margin and are surprised when their bank account doesn't reflect their expected profits. Shipping costs, advertising spend, and payment processing fees can eat 30-50% of what appears to be a healthy gross margin.
Margin vs. Markup: Know the Difference
Margin and markup both express profit relative to cost, but they use different denominators. Margin uses the selling price as its base; markup uses the cost. Confusing the two can lead to pricing errors that erode your profitability.
For example, a 50% markup on a $40 product means selling at $60 — but that's only a 33% margin. When setting prices, always think in terms of margin to ensure you're hitting your targets.
Related Resources
- Shopify Profit Margin Benchmarks (2026)
- How to Track COGS and Expenses on Shopify
- Sunforce P&L Feature
- True Profit Calculator
Frequently Asked Questions
What is the difference between margin and markup?
Margin is profit as a percentage of selling price (profit ÷ price). Markup is profit as a percentage of cost (profit ÷ cost). A product that costs $60 and sells for $100 has a 40% margin but a 66.7% markup.
What is a good profit margin for ecommerce?
Gross margins for ecommerce typically range from 40-60%. After accounting for all costs (shipping, ads, fees), a healthy net margin is 10-20%. It varies significantly by niche — luxury goods tend to have higher margins than electronics.
How do I calculate net margin including ad costs?
Net margin = (Selling Price - COGS - Shipping - Ad Cost per Unit) ÷ Selling Price × 100. This calculator does this automatically when you enter your ad cost per unit.
Sun calculates margins for every product in your store
No manual entry needed. Sun connects to your store and ranks every product by profitability — including fees, shipping, and ad costs.
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