What is the difference between profit margin and markup?

Profit margin is the percentage of total selling price that represents profit: (Profit ÷ Revenue) × 100. Markup is the percentage added to the original cost of the product to reach that price: (Profit ÷ Cost) × 100. For example, buying an item for $50 and selling it for $100 yields a 50% margin and a 100% markup.

What is considered a healthy profit margin in e-commerce?

Average e-commerce gross profit margins generally range between 35% and 55%. Net profit margins (after marketing, fulfillment, payment processor fees, and overhead) typically fall between 10% and 20% for established online stores.

How do you calculate selling price from a target profit margin?

To calculate target selling price, divide your product cost by (1 minus your target margin in decimal). For example, if a product costs $40 and you want a 60% margin: $40 ÷ (1 - 0.60) = $40 ÷ 0.40 = $100 selling price.

Can profit margin ever exceed 100%?

No. Profit margin is expressed as a fraction of selling price. Since your gross profit cannot exceed your total sales price (unless cost was negative), margin cannot exceed 100%. Markup, however, can easily exceed 100%, 200%, or more.

How should Amazon FBA and Shopify fees be accounted for?

When calculating true e-commerce margins, add marketplace referral fees (typically 15% on Amazon), FBA pick & pack fees, payment gateway fees (2.9% + $0.30 on Shopify), and average customer return rates directly into your Total Cost basis.

verified 2026 GAAP Retail Standard • Gross Margin vs Cost Markup Precision

Profit Margin Calculator

Calculate gross profit margin, percentage markup, and optimal selling prices for e-commerce, Amazon FBA, retail, and wholesale products.

tune Unit Cost & Pricing Strategy

Step 1 of 2

Unit Cost / COGS ($) Cost of Goods Sold

Includes manufacturing, procurement, shipping, packaging, and fees.

Retail Selling Price ($) Target Revenue

analytics Profitability Metrics

Live Computed

Unit Gross Profit

$40.00

From $100.00 selling price

Gross Margin

40.0%

Markup on Cost

66.7%

Unit Retail Price

$100.00

COGS Expense

$60.00

Unit Revenue Split COGS vs Margin

storefront

Cost (COGS)

$60.00

Gross Profit

$40.00

health_and_safety E-Commerce Retail Standard (40% – 60%)

Healthy

Direct-to-consumer (DTC) brands typically target 50%–70% gross margins to sustain digital ad costs and operations.

E-Commerce & Retail Suite

Recommended Calculators

View E-Commerce & Retailarrow_forward

shopping_cartCost Of Goods Sold Calculator Small Business

Easily calculate your small business's Cost of Goods Sold (COGS) for 2026. Get accurate figures for inventory, purchases, and direct costs.

Open Calculator →

shopping_cartCost Of Goods Sold For Service Business Calculator

Accurately calculate your service business's Cost of Goods Sold (COGS) for 2026. Understand direct labor, materials, and other service-related expenses.

Open Calculator →

sellDiscount Calculator

Calculate sale price after percentage off discounts, stacked coupons, and local sales tax. Fast shopping and e-commerce savings calculator.

Open Calculator →

Knowledge Base & Methodology

Frequently Asked Questions

Commercial Margin Disclosure (2026): Gross profit margin calculations adhere to Generally Accepted Accounting Principles (GAAP) for inventory accounting. Calculated margins represent gross product profit prior to operating expenses, customer acquisition costs (CAC), and merchant payment processing fees.