E-commerce Margin Calculator
Calculate your gross margin, net margin after fees and markup in seconds. Free, no signup required.
Everything is calculated live in your browser, nothing is sent.
Product selling price.
Purchase or manufacturing cost of the product.
Average shipping cost per order.
Percentage taken by the payment processor (Stripe, PayPal, etc.).
Average advertising cost to generate one sale (CPA).
Real profit after COGS, shipping, transaction and ads.
Percentage of real profit on the sale price.
Margin percentage before additional fees.
Multiplier applied to the cost of goods.
Your net margin is healthy. You generate real profit after all costs.
Gross vs net margin: the difference that changes everything
Gross margin only considers COGS. Net margin includes all real costs: shipping, transaction, advertising. A product with 60% gross margin can have 5% net margin if ad and logistics costs are high. Net margin determines whether your business is viable.
$50 - $20 = $30 gross margin (60%)
$50 - $20 - $5 - $1.50 - $12 = $11.50 (23%)
$50 / $20 = 2.5x markup
The different types of margins in e-commerce
Revenue minus cost of goods sold (COGS). This is the margin before deducting shipping, transaction and advertising fees. Target: minimum 50% for a profitable e-commerce business.
Gross margin minus variable costs (shipping, transaction). This is the margin available to cover fixed costs and advertising. A key indicator for deciding which products to promote.
Contribution margin minus all costs (advertising, operational, subscriptions). This is the real profit per order. Target: 10-20% minimum for a sustainable e-commerce business.
Markup is calculated on purchase cost (buy $10, sell $25 = 150% markup). Margin is calculated on sale price (15/25 = 60% gross margin). Do not confuse the two.
The 4 most common margin mistakes
A 100% markup (buy $10, sell $20) equals a 50% margin, not 100%. This confusion leads to overestimating profitability.
Stripe/PayPal fees (1.4-2.9%) and platform fees (Shopify, WooCommerce) reduce real margin by 3 to 5 points per order.
A 10% return rate with full refund reduces your effective margin by 10%. Returns must be factored into profitability calculations.
Calculating margin on gross revenue (before discounts and refunds) overestimates real margin. Always calculate on net revenue.
Frequently asked questions
What's the difference between gross and net margin?+
Gross margin = price - COGS. Net margin includes all costs: shipping, transaction, advertising. Net margin is what matters to know if you're actually making money.
What net margin should I aim for in e-commerce?+
Between 15% and 30% is considered healthy. Below 10%, your business is fragile. Above 30%, you have room to scale aggressively.
How do I improve my net margin?+
Four levers: negotiate COGS, optimize shipping costs (thresholds, negotiated rates), reduce transaction fees (negotiate with Stripe/PayPal), and lower CPA (better targeting, creatives, conversion).
Are markup and margin the same?+
No. Markup is the multiplier on cost (COGS x markup = price). Margin is the percentage of price that is profit. A 2x markup gives 50% gross margin, not 100%.
Does this calculator include taxes?+
No. Enter prices with or without tax, but be consistent. For automated calculation including all taxes and real costs, Fullmetrix does it on every order.
What net margin should I target in e-commerce?+
A net margin of 10 to 20% is considered healthy for e-commerce. Below 10%, any increase in advertising or shipping costs can make the business unprofitable.
How can I improve margins without raising prices?+
Negotiate supplier costs, optimize shipping fees (weight tiers, carrier negotiation), reduce product returns and focus your ad budget on high-margin products.
Does Fullmetrix show margin per product?+
Yes. Fullmetrix calculates gross and net margin per product, per category and per period. You can instantly identify profitable products and those dragging down your overall margin.
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