How do you calculate product profit margin?

Profit Margin = (Selling Price - Total Costs) / Selling Price × 100. Include all variable costs: COGS, shipping, payment fees, and marketplace fees. A $50 product with $20 total costs has a 60% margin.

What is the difference between margin and markup?

Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. A product that costs $20 and sells for $50 has 60% margin but 150% markup. Retailers often think in markup; margin is better for profitability analysis.

What is a good profit margin for e-commerce?

Healthy e-commerce margins are 40-60%. Below 30% makes paid advertising difficult. Luxury/premium brands can achieve 60-80%. Commodity products may only manage 20-30%. Higher margin gives more room for customer acquisition.

What costs should I include in margin calculations?

Include all variable costs per unit: product cost (COGS), packaging, inbound shipping, outbound shipping (if covered), payment processing (typically 2.9% + $0.30), marketplace fees (Amazon 15%, Etsy 6.5%), returns allowance.

How can I improve my product margins?

Key strategies: (1) Negotiate better supplier pricing with volume, (2) Raise prices gradually, (3) Reduce shipping costs with better carriers/packaging, (4) Sell direct to avoid marketplace fees, (5) Reduce returns with better descriptions, (6) Bundle products.

Product Margin Calculator

Calculate your product profit margins instantly. Account for COGS, shipping, fees, and marketplace costs. Get AI tips to improve profitability.

Enter Your Values

Selling Price*

Price customers pay for the product

Cost of Goods (COGS)*

Product cost including manufacturing, materials, shipping to you

Shipping Cost to Customer

Cost to ship to customer (if you cover it)

Payment Processing Fees

Stripe, PayPal, or payment processor fees per order

Marketplace Fee

Amazon, Etsy, or marketplace percentage (0 if direct)

Units Sold per Month

units

For monthly profit calculation

Formula

Profit Margin = ((Revenue - Total Costs) / Revenue) × 100

Product margin shows what percentage of revenue is profit. Include all variable costs for accurate margin.

Profit Margin47.0%

Healthy 47.0% margin — good for e-commerce.

Profit per Unit$23

Total Costs per Unit$27

Markup150%

COGS$20

Shipping$5

Payment Fees$2

Monthly Revenue$4,999

Monthly Profit$2,349

Annual Profit$28,188

E-commerce Margin Benchmarks

Losing MoneyNegative margin — unsustainable

< 0%

Low0-20% — difficult for paid acquisition

0.01% – 19.99%

Average20-40% — typical for commodity products

20% – 39.99%

Healthy40-60% — strong for DTC brands

40% – 59.99%

Excellent60%+ — premium/luxury pricing power

> 60%

Source: Industry averages 2024

How to Calculate Product Margin

Enter your selling price (what customers pay)
Enter your cost of goods (manufacturing, materials, inbound shipping)
Add shipping cost to customer if you cover it
Add payment processing fees (Stripe, PayPal)
Add marketplace fee percentage if selling on Amazon, Etsy, etc.
Add monthly units for profit projections
Chat with our AI E-commerce Analyst for margin optimization

E-commerce Margin Benchmarks

40-60%

Fashion/Apparel

15-30%

Electronics

60-80%

Beauty/Cosmetics

30-50%

Home Goods

25-40%

Food/Beverages

20-35%

Amazon Seller Avg

Source: Industry benchmarks 2024

Product Margin Calculator

E-commerce Margin Benchmarks

How to Calculate Product Margin

E-commerce Margin Benchmarks

Frequently Asked Questions

How do you calculate product profit margin?

What is the difference between margin and markup?

What is a good profit margin for e-commerce?

What costs should I include in margin calculations?

How can I improve my product margins?