Free tool
Ecommerce margin calculator
Enter your cost, price, fulfilment cost and payment fees to get gross margin, markup, profit per unit, the break-even price, and the exact price you need to hit a target margin once percentage fees are taken. Free, and nothing leaves your browser.
Pick, pack, ship and any subsidised delivery.
Percentage of the selling price. Card processing, marketplace commission.
Gross margin
27.9%
Profit per unit
$27.63
Markup on cost
59.7%
Total landed cost
$71.37
Includes $2.87 in fees
Price for 35% margin
$110.31
The lowest price that still hits your target once fees are paid.
Break-even price
$70.55
Below this you lose money on every unit sold.
Margin and markup are not the same number
This trips people up constantly, and it costs real money. Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A product that costs $60 and sells for $100 has a 40% margin and a 66.7% markup. Ask for a 40% markup when you meant a 40% margin and you have priced the product at $84 instead of $100.
| Measure | Formula | Value at cost $60, price $100 |
|---|---|---|
| Gross margin | (price − cost) ÷ price | 40.0% |
| Markup | (price − cost) ÷ cost | 66.7% |
| Profit per unit | price − cost | $40.00 |
Why the fee percentage changes the arithmetic
Most margin calculators stop at cost and price. In ecommerce, two costs scale differently: fulfilment is roughly fixed per unit, while payment processing and marketplace commission are a percentage of whatever you charge. That means you cannot simply add a target margin to your cost, because raising the price also raises the fee.
The price that hits a target margin once a percentage fee is taken is: price = (cost + fulfilment) ÷ (1 − fee% − margin%). With a $62 cost, $6.50 fulfilment, 2.9% fees and a 35% target margin, that is 68.50 ÷ (1 − 0.029 − 0.35) = 68.50 ÷ 0.621 = $110.31. Adding 35% to the landed cost would have given $92.48, which actually lands at about 22% margin once the fee is paid.
What to include in unit cost
- Landed product cost — supplier price, inbound freight, duty and any inbound handling. Not the invoice price alone.
- Fulfilment — pick, pack, packaging, outbound shipping and the portion of free shipping you actually absorb.
- Percentage fees — card processing, marketplace commission, affiliate payout if it applies to that SKU.
- Returns — if a category returns at 20%, the cost of those returns belongs in the unit economics, not in a separate line nobody looks at.
Excluding returns is the most common omission and it is the one that turns an apparently healthy 30% margin category into a break-even one. If you know your return rate and your net recovery on a returned unit, fold it into the fulfilment field.
Using margin to set a competitive floor
The point of knowing your margin precisely is that it tells you when not to compete. If a competitor's price sits below your break-even, matching them is not aggressive pricing, it is paying customers to buy from you. The right response is to hold, and to check whether they are clearing stock, buying better than you, or making a mistake.
Repricing — rule builder
Beat market low on Audio
Active- Scope
- Category: Audio
- Strategy
- Match lowest in-stock competitor − $1.00
- Guardrail
- Never below 22% gross margin
- Excludes
- Out-of-stock competitors, unauthorised sellers
- Max change
- 6% per day
- Apply
- Review queue, then push to store
Simulated impact — next 30 days
- Products in scope7SKUs
- Price changes proposed12this run
- Blocked by margin floor3held
Three changes were blocked because they would have taken gross margin below 22%. The rule never overrides its own floor.
| Rule | Scope | SKUs | Status |
|---|---|---|---|
| Beat market low on Audio | Category: Audio | 7 | Active |
| Hold MSRP on protected brands | Brand: Ironside, Granite | 6 | Active |
| Recover margin on Home & kitchen | Category: Home & kitchen | 7 | Awaiting review |
| Clear slow movers | Tag: aged-90d | 4 | Paused |
Know your margin position on every SKU, every day
Price Intelligence holds your cost and your competitors' live prices in one place, so margin-at-risk is a dashboard rather than a spreadsheet you rebuild each quarter.
Frequently asked questions
What is a good gross margin for ecommerce?
It varies enormously by category. Consumer electronics often run in the 8% to 15% range because the products are identical and price-comparable. Private-label home goods and beauty commonly run 50% or higher. The useful benchmark is not an industry average but your own contribution margin after fulfilment and fees, compared across your categories.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup), both as decimals. A 66.7% markup is 0.667 ÷ 1.667 = 40% margin. Going the other way, markup = margin ÷ (1 − margin), so a 40% margin is 0.4 ÷ 0.6 = 66.7% markup.
Should shipping go in cost or come out of price?
Put the shipping you actually absorb into the fulfilment field. If the customer pays shipping in full and it exactly covers your cost, leave it out of both. If you offer free shipping over a threshold, use your blended real cost per unit rather than the headline carrier rate.
What is keystone pricing?
Keystone is the traditional retail rule of doubling the wholesale cost, which is a 100% markup and a 50% gross margin. It survives because it is easy, not because it is optimal. In categories with heavy price comparison it usually prices you out; in categories with no comparison it often leaves money on the table.
Does this calculator store what I enter?
No. It runs entirely in your browser and nothing is transmitted or stored.
Keep reading
- Price elasticity calculatorWork out whether a discount will actually pay for itself in volume.
- Repricing softwareTurn your margin floor into a rule that cannot be overridden.
- Ecommerce pricing strategiesTen pricing strategies, when each fits, and how each fails.
- Price position analyzerSee where your prices sit against the market before you change them.
- Repricing strategiesThe named strategies and the guardrail each one needs.
- Competitor price monitoringKnow what competitors charge before you set your floor.
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