How it is calculated

Gross margin = (price minus cost) divided by the price. Markup = (price minus cost) divided by the cost. Price for a target margin = cost divided by (1 minus the target margin).

Gross profit is the price minus what the product costs you. Margin and markup both start from it but divide by different numbers: margin by the price, markup by the cost. That is why a product sold above its cost always has a markup higher than its margin.

To reach a target margin, divide the cost by one minus the margin written as a fraction. A 65% margin leaves 35% of the price for the cost, so the price is the cost divided by 0.35. A margin of 100% or more cannot be reached, and the calculator shows n/a.

Gross margin leaves out shipping, fees and ads. The e-commerce profit calculator, among the calculators below, takes them off too.

A worked example

These are the numbers the calculator opens with, so you can follow each step in the form above.

  1. A product costs €18.00 and sells for €45.00, and you want a 65% margin.
  2. Gross profit: €45.00 minus €18.00 is €27.00.
  3. Gross margin: €27.00 divided by €45.00 is 60.0%. Markup: €27.00 divided by €18.00 is 150.0%.
  4. Price for a 65% margin: €18.00 divided by 0.35 is €51.43.

Terms used: Gross margin, COGS (cost of goods sold), Net profit margin.

Before you set a price, look at what competitors charge: Shopify store analytics lists a store's best sellers with their prices.

The numbers stay in your browser: nothing you type is sent to SellWinners unless you press Calculate with JavaScript turned off.