This calculator shows how much profit you make on a sale and what percentage of your selling price that profit represents.
Margin is one of the most important pricing metrics because it determines how efficiently your business turns revenue into profit. A product can sell well but still perform poorly if the margin is too low.
Understanding margin is essential for ecommerce, retail, and service businesses where pricing decisions directly impact profitability.
The result shows both your profit and margin percentage. Profit tells you how much money you make per sale, while margin shows how efficient that profit is relative to the selling price.
A higher margin gives you more flexibility for discounts, fees, VAT, and advertising costs. A low margin increases risk and reduces scalability.
Profit = Selling Price − Cost
Margin = Profit ÷ Selling Price × 100
This method measures profit relative to the selling price, making it easier to compare pricing efficiency across different products.
Margin is the foundation of profitability. It directly determines how much revenue you need to generate profit and how resilient your business is to costs.
For ecommerce businesses, margin must absorb platform fees, payment processing, shipping, returns, advertising costs, and VAT. A product with a 20% margin may appear profitable but can quickly become loss-making once these costs are included.
Improving margin — even slightly — can dramatically increase total profit and reduce your break-even point. This is why pricing strategy is one of the most powerful levers in business growth.
Example 1:
Cost £60, Sell £100 → Profit £40 → Margin 40%
Example 2:
Cost £80, Sell £100 → Profit £20 → Margin 20%
Example 3:
Lower margin products require higher sales volume to achieve the same profit.
It depends on your business model, but higher margins provide more flexibility and profitability.
No. Margin is based on selling price, markup is based on cost.
Yes, if your selling price is below cost.