How the tool works
Choose whether to find your margin from a price you have, or the price from a margin you want. Enter the cost and any platform fee, and the tool shows profit margin, markup and profit per unit. The discount section shows the extra units you must sell to make up for it, and the pricing ladder gives the price for margins from 10% to 60%.
Profit margin versus markup
Profit margin = profit ÷ selling price. Markup = profit ÷ cost. A product that costs 60 and sells for 100 earns 40 profit: a 40% margin but a 66.7% markup. Mixing them up is one of the commonest pricing mistakes: adding 50% to cost feels like a 50% margin when it is really only 33%.
That is why the calculator shows both numbers together and works out your margin after the platform or payment gateway fee that is taken from the price.
How to find the price for the margin you want
Choose “Find the price for a margin I want”. The formula: price = cost ÷ (1 − margin − fee). If your cost is 60, you want a 35% margin and the platform fee is 3%, the price you need is about 96.8. The pricing ladder shows the price for margins from 10% to 60% at once.
What is a good profit margin?
There is no single number. Gross margins differ widely between retail, restaurants, services and digital products. What matters is that your gross margin covers fixed costs (rent, salaries, marketing) and leaves a worthwhile net profit. Compare against your own industry and competitors, not a different kind of business.
Discounts eat profit faster than you think
A 10% discount on a product with a 30% margin does not cut your profit by 10%, it cuts it by about a third, so you need to sell roughly half as many units again to earn the same gross profit. Use the discount impact section before announcing any offer to see the volume it must reach to justify itself.
Frequently asked questions
What is the difference between margin and markup?
Margin = profit ÷ selling price, markup = profit ÷ cost. Adding 50% to cost gives only a 33% margin.
How do I calculate the selling price from a margin?
Price = cost ÷ (1 − margin − fee). Choose “Find the price for a margin I want” and the tool does it for you.
What is a good profit margin?
It varies by business. What matters is that gross margin covers your fixed costs and leaves a worthwhile net profit. Compare with your industry and competitors.
How does a discount affect profit?
A 10% discount on a product with a 30% margin cuts unit profit by about a third, so you must sell roughly half as much again to keep total profit.
Does the calculation include taxes?
No. It relies only on the numbers you enter, so enter a price and cost net of tax for a more accurate net margin.
Need this built around your business?
Web Maestro is a registered company in Amman that builds websites, stores and systems and improves their search visibility. Tell us about your project and we will suggest what fits.
