Free tool · Profit margin calculator
What do you really make on every order?
Work out your gross margin, markup and profit per order once product, fulfilment, postage and fees are paid. See where every pound goes, and the price you need to hit your target margin.
Profit margin calculator
From selling price to real profit.
Fill in what you charge and what it costs you to get one order to your customer. All figures are per order. Start with the examples and change them to yours.
One order
Fulfilment costs
Fees and returns
Storage per order: your monthly storage bill divided by the orders you ship that month. Cost of each return includes return postage, handling and any stock you can’t resell. Example figures only, not our prices.
Margin vs markup
Same numbers, different answers.
Margin and markup both compare your selling price with your cost, but against a different starting point. Mixing them up is one of the easiest ways to underprice.
Gross margin
(Price − cost) ÷ priceHow much of every pound you take is left after paying for the product. It can never reach 100%.
Sell for £25 (ex VAT), product costs £10: £15 ÷ £25 = 60% margin.
Markup
(Price − cost) ÷ costHow much you add on top of what the product costs you. It can go well over 100%.
Same product: £15 ÷ £10 = 150% markup.
| Markup | Gross margin | Price for a £10 product |
|---|---|---|
| 25% | 20% | £12.50 |
| 50% | 33.3% | £15.00 |
| 100% | 50% | £20.00 |
| 150% | 60% | £25.00 |
| 200% | 66.7% | £30.00 |
| 300% | 75% | £40.00 |
Where your money goes
Gross margin is only the start.
A healthy product margin can disappear once you add the cost of getting each order out the door. This is what comes off your selling price, in order.
VAT
If you’re VAT registered, a sixth of a VAT-inclusive price goes to HMRC.
Product cost
What you pay for the item, including inbound freight and duty.
Fulfilment
Pick and pack, packaging, postage and a share of storage.
Fees
Marketplace commission and card or payment fees.
Returns
Return postage, handling and stock you can’t resell.
FAQs
Margin questions, answered.
How do I calculate gross margin?
Take your selling price (ex VAT), subtract the product cost, then divide by the selling price. Sell for £25 with a £10 product cost and your gross margin is £15 ÷ £25 = 60%.
What’s the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. A 100% markup is a 50% margin.
Should I include fulfilment costs in my margin?
Gross margin usually only covers the product cost. To see what you really make, also take off fulfilment, postage, fees and returns. The calculator shows both.
Should I calculate margin with or without VAT?
Without. If you’re VAT registered, the VAT you charge belongs to HMRC, so work your margin out on the price excluding VAT.
How can a 3PL improve my margin?
Through better postage rates than you can get alone, the right box size so you’re not paying to ship air, fewer mis-picks and returns, and no warehouse rent or staff to cover in quiet months.
Want lower costs per order?
Our pricing is published, so you can drop our real costs into the calculator before you talk to us.