Calculate your margin in ten seconds
Enter purchase price, shipping and fees, and read off margin, markup and profit. Or work backwards: enter your target margin and get the sales price.
Calculator
Fees: payment provider plus marketplace commission, based on the gross price. The return rate spreads the shipping cost of returns across the units sold.
All percentages relate to the net sales price. VAT is a pass-through item and is left out.
Margin, trade margin or markup?
Three figures that often get mixed up. The calculator above shows all three side by side.
Trade margin (margin)
The share of the sales price left after deducting the purchase price. Formula: (net sales price minus purchase price) divided by net sales price. The sales price is the reference figure.
Markup (cost-plus markup)
The same difference, but related to the purchase price. A 100 percent markup equals a 50 percent margin. Mix the two up and you price yourself into the ground.
Profit margin
What is left after all costs: shipping, payment fees, marketplace commission, packaging. Only this figure tells you whether an item is worth selling.
The formulas, to check for yourself
Always calculate net, in other words without VAT. The 19 percent belongs to the tax office and has no place in the margin. An example: purchase price 40 euros net, sales price 89 euros gross. Net, that is 74.79 euros.
- Margin: (74.79 minus 40) divided by 74.79 = 46.5 percent
- Markup: (74.79 minus 40) divided by 40 = 87 percent
- Profit before fixed costs: 74.79 minus 40 minus 4.90 shipping minus 2.24 payment fee = 27.65 euros, which is 37 percent profit margin
The other way round, if you have a target margin: net sales price = purchase price divided by (1 minus target margin). At 40 euros purchase price and a 45 percent target margin, that is 72.73 euros net, so 86.55 euros gross. For the shop price, you round that up to 86.90 or 89 euros.
Which costs belong in the calculation?
At least shipping, packaging and payment fees. If you sell through eBay, Amazon or Kaufland, the marketplace commission comes on top, often 8 to 15 percent of the gross price. Returns are their own line item: at a 10 percent return rate, you spread the cost of each returned item across the nine sold. On top of that comes the share of fixed costs, such as the shop, software and advertising, that the item has to carry each month.
A 30 percent markup on the purchase price is only a 23 percent margin. After shipping, fees and returns there is often nothing left. Target margins belong on the sales price.
How to price hundreds of items
A single item is done with the calculator above. For a whole wholesaler range, you need rules instead of manual work.
Target margin per product group
Not every category can carry the same margin. Expensive furniture runs on 25 percent, accessories need 50.
Store costs as a rule
Shipping flat rate, fee percentage, return share: set it once, valid for every item.
Rounding and price thresholds
86.55 becomes 86.90 or 89.00. The rule sets the threshold prices, not your hand.
Automatic on purchase price changes
If the wholesaler changes the price, the rule recalculates and writes the sales price to the shop.
Pricing rules instead of spreadsheets
In Import2Shop you set up a pricing template per supplier and product group: target margin or markup, shipping and fee shares, rounding rule, minimum price. Every imported product gets its sales price from that, and every time the wholesaler changes the price, it is recalculated. How the rules work in detail is shown on the pricing page; you can also carry the manufacturer’s RRP as an upper limit. Two more tools: the markup calculator converts factor, markup and margin into each other, and the inventory carrying cost calculator shows what your own warehouse costs compared with drop shipment.
Frequently asked questions about margin
How do I calculate the margin?
Margin = (net sales price minus net purchase price) divided by net sales price, times 100. At a 40 euro purchase price and a 74.79 euro net sales price, that is 46.5 percent.
What is the difference between margin and markup?
Margin relates the difference to the sales price, markup relates it to the purchase price. A 100 percent markup is a 50 percent margin.
How do I calculate the sales price from a target margin?
Net sales price = purchase price divided by (1 minus target margin). At a 40 euro purchase price and a 45 percent margin: 40 divided by 0.55 = 72.73 euros net, plus 19 percent VAT, 86.55 euros gross.
Do I calculate the margin on the gross or net price?
Net. VAT is a pass-through item and does not belong in the margin. Divide the gross price by 1.19, then calculate.
What margin is typical in online retail?
That depends on the product group. Electronics often run at 10 to 20 percent margin, fashion and accessories at 40 to 60. What matters is the profit margin after shipping, fees and returns.
How do I factor in marketplace fees?
The commission is usually calculated on the gross price. In the calculator, you enter the fee percentage, and it is deducted from the sales price before the profit margin is worked out.
Set target margin, costs and rounding once as a rule. Import2Shop recalculates every item and every price change from the wholesaler.
