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Shopify profit margin calculator

Free, no sign-up. Everything is worked out in your browser; nothing you type is sent anywhere.

Enter a product's price and what it really costs you to sell it: the product itself, shipping you pay, card fees and the ads it took to get the order. You'll see what you actually keep per order, your margin and markup, the lowest price that still breaks even, and the price you need for the margin you want.

How the calculator works

Everything is worked out per order. First the calculator takes off your discount to get what the customer actually pays, then subtracts every cost that order brings:

Customer pays = Price × (1 − Discount %)
Payment fees = Customer pays × Fee % + Fixed fee
Profit = Customer pays − Cost − Shipping − Payment fees − Ad cost

Margin and markup both start from that profit, but divide it by different things:

Margin = Profit ÷ Customer pays
Markup = Profit ÷ Your costs per order

The break-even price and the price for a target margin have to allow for the fact that the payment fee grows with the price. That's why the fee % is taken off at the bottom of the fraction instead of being added on top:

Price for a target margin = (Cost + Shipping + Fixed fee + Ad cost) ÷ (1 − Fee % − Target margin)
then ÷ (1 − Discount %) if you give a discount. With a target margin of 0% this is the break-even price.

Without shipping, fees or ads this is the classic price = cost ÷ (1 − margin): a €16 product at a 30% margin needs a price of €16 ÷ 0.70 = €22.86. The extra costs are why real prices have to be higher.

Margin vs markup: what's the difference?

Both tell you how much you make on a sale, but they divide by different numbers, and mixing them up is one of the most common pricing mistakes.

• Margin is profit as a share of the price. It tells you how much of every sale you keep.
• Markup is profit as a share of your cost. It tells you how much you added on top of what you paid.

Say a product costs you €20 and sells for €50. Your profit is €30, so your margin is 30 ÷ 50 = 60%, but your markup is 30 ÷ 20 = 150%. The same sale, two very different numbers. Markup is always the bigger one, so if someone tells you they "make 50%", ask which one they mean: a 50% markup is only a 33% margin.

A worked example

Here are the made-up numbers the calculator starts with. A store sells a lamp for €40.00 (without VAT). It costs €16.00 from the supplier, shipping costs the store €5.00, card fees are 2.9% + €0.30, and the store spends about €6.00 on ads for each order.

That's a 28.9% margin (11.54 ÷ 40.00) and a 40.5% markup (11.54 ÷ 28.46). Looking only at the product cost, the lamp seems to make €24.00 a sale, a 60% margin. After shipping, fees and ads, less than half of that is left.

The break-even price is (16.00 + 5.00 + 0.30 + 6.00) ÷ (1 − 0.029) = €28.12; below that, every order loses money. For a 30% margin the lamp needs (16.00 + 5.00 + 0.30 + 6.00) ÷ (1 − 0.029 − 0.30) = €40.69. If the store then runs a 20% off sale, the customer pays €32.00, profit drops to €3.77 and the margin to 11.8%.

Common mistakes when working out your margin

• Only counting the product cost. Shipping, payment fees, packaging and ads are real costs of every order. Leave them out and your margin looks far better than it is.
• Forgetting discounts. A 20% discount code takes 20% off your price but none off your costs, so it cuts your profit by much more than 20%.
• Treating markup as margin. Doubling your cost is a 100% markup but only a 50% margin, before any other costs.
• Counting VAT or sales tax as income. Tax you collect isn't yours. Work with prices without tax.
• Old cost prices. Supplier prices go up. If the cost per item in Shopify is out of date, so is every margin you work out from it.
• Forgetting returns. If one order in ten comes back, part of every sale pays for those returns. Leave some room in your margin for them.

FAQ

What is a good profit margin for a Shopify store?

It depends on your products and how you sell, but many store owners aim for at least 20% left over per order after product cost, shipping, payment fees and ads. This calculator calls anything below 20% thin, because one return or a slightly more expensive ad can wipe it out.

What is the difference between margin and markup?

Margin is profit divided by the price the customer pays. Markup is profit divided by your costs. A product that costs €20 and sells for €50 has €30 profit: a 60% margin but a 150% markup. A 50% markup is only a 33% margin.

What payment fee should I enter?

The 2.9% + 0.30 default is only an example. Your real rate depends on your Shopify plan, your country, the card type and whether you use Shopify Payments or another provider, which can add an extra transaction fee. You can see your rates in your Shopify admin under Settings > Payments.

Should I enter prices with or without VAT or sales tax?

Without. Tax you collect is passed on to the tax office, so it is not part of your revenue. If your store shows prices including VAT, take the VAT out first, for example a €48.40 price with 21% VAT is €40.00 without it.

How do I find products that are selling below cost?

Add a cost per item to each product in Shopify, then compare it with the price. Doing that by hand is slow for a big catalog; Shoply: Item Scan & Analytics, a free Shopify app, checks every product and variant for you and can raise prices to a target margin in bulk.