Find margin from cost and price, or calculate your VAT-inclusive selling price from a target margin.
Net Price = Gross Selling Price ÷ (1 + VAT % ÷ 100)True commercial revenue retained by the business after statutory indirect sales tax is deducted.
Profit = Net Selling Price − Unit CostAbsolute dollar gross profit generated on each unit sold prior to operating expenses.
Margin (%) = (Profit ÷ Net Selling Price) × 100Percentage of net revenue that represents profit. Margin can never exceed 100%.
Markup (%) = (Profit ÷ Unit Cost) × 100Percentage added on top of direct cost to establish the selling price. Markup can exceed 100%.
Net Price = Cost ÷ (1 − Target Margin % ÷ 100) | Gross = Net × (1 + VAT %)Required net and gross customer selling price necessary to achieve your desired profit margin.
Break-Even ROAS = 100 ÷ Margin %Theoretical minimum advertising return threshold considering product cost alone.
A product with $300 unit cost, $600 retail selling price, and a 20% VAT rate.
Profit margin reflects the proportion of sales revenue remaining after paying for the product itself. It is the fundamental metric dictating your business cash flow and growth flexibility.
Confusing markup with margin is one of the most common financial errors in e-commerce, frequently leading to discount promotions that inadvertently destroy profitability.
If a product costs $100 and sells for $150, profit is $50. The markup on cost is 50% ($50 ÷ $100), but the profit margin is only 33.3% ($50 ÷ $150).
Offering a 40% discount believing you have a 50% margin creates an immediate loss on every sale. Always compute discounts against margin, not markup.
Sales tax and VAT are collected on behalf of the government and do not belong to your business. Computing margin against VAT-inclusive retail prices artificially inflates your perceived profit.
True margins must always be calculated against net revenue, with VAT added back when setting consumer-facing price tags.
A product with a 40% gross margin requires a 2.50x approximate break-even ROAS (100 ÷ 40) to cover inventory costs.
However, real e-commerce operations also incur shipping, payment processing fees, and customer returns. For a full unit economics breakdown that includes all variable costs, use our Break-Even ROAS calculator.
Profit Margin (%) = [(Net Selling Price − Cost) ÷ Net Selling Price] × 100. The denominator is always the selling price, never the cost.
No. A 50% markup yields a 33.3% margin. To achieve a 50% margin, you need a 100% markup (selling at twice the cost).
Divide your cost by (1 − target margin). For example, with a $400 cost and a 20% target margin: $400 ÷ 0.80 = $500 net price.
Marketplaces like Amazon, eBay and Etsy deduct commissions and fulfillment fees directly from the sale; your current rates are in your seller dashboard. Use our Break-Even ROAS tool to incorporate these platform fees into your margins.
There is no single healthy number; it depends on your category, business model and order volume. The real question is whether your margin covers variable costs such as ads, shipping, fees and returns. The break-even ROAS calculator shows you exactly that.
Find the minimum ROAS and maximum CPA needed to avoid losses after COGS, shipping, payment fees, VAT and returns.
Divide your ad revenue by ad spend. Add your profit margin to see your break-even threshold and net profit immediately.
Work backwards from monthly revenue targets, average order value and conversion rates to determine required ad spend.
ROAS and CPA are only as accurate as your tracking. Missing or duplicated conversions break every calculation above. Let an independent audit check your measurement.