AM Margin is the share of the selling price you keep as profit. It is the number that tells you whether a product can pay for ads, returns and your time. This calculator works it out three ways, depending on what you already know, and can subtract payment fees and other per-unit costs so you see the net margin as well as the gross one.
How to use the calculator
Pick the mode that matches your question:
- Cost and price. Enter what the product costs you and what you sell it for. You get gross profit, margin percentage and markup percentage.
- Cost and target margin. Enter your cost and the margin you want. You get the selling price you need.
- Price and target margin. Enter the selling price the market will accept and the margin you want. You get the maximum you can pay for the product.
Then, optionally, add a payment fee as a percentage plus a fixed amount (2.9% + $0.30 is filled in, which matches Shopify Basic and Stripe's standard US online rate), and extra costs per unit: shipping, packaging, ad cost per sale and other costs. The result then shows net profit and net margin next to the gross figures. In the two target modes, a note also tells you the price, or the maximum cost, that keeps your target margin after those extra costs.
How to calculate profit margin
| Result | Formula |
|---|---|
| Gross profit | Price − Cost |
| Margin | (Price − Cost) ÷ Price × 100 |
| Markup | (Price − Cost) ÷ Cost × 100 |
| Price for a target margin | Cost ÷ (1 − Margin) |
| Maximum cost for a target margin | Price × (1 − Margin) |
| Payment fee | Price × Fee % + Fixed fee |
| Net profit | Price − Cost − Payment fee − Extra costs |
| Net margin | Net profit ÷ Price × 100 |
Worked example: gross to net
You buy a product for $12 and sell it for $30. Gross profit is $18, the margin is 60% ($18 ÷ $30) and the markup is 150% ($18 ÷ $12).
Now add a payment fee of 2.9% + $0.30, which is $1.17 on $30, plus $4 shipping, $1 packaging and $5 ad cost per sale. Net profit is $30 − $12 − $1.17 − $10 = $6.83, a net margin of about 22.8%. The same product that looked like a 60% margin keeps less than a quarter of the price.
Switch to cost and target margin with 40%: the gross price is $12 ÷ 0.60 = $20. But with the same fees and $10 of extra costs, the note says you need about $39.05 to keep a 40% net margin: ($12 + $0.30 + $10) ÷ (1 − 0.40 − 0.029).
Quick answers to common margin questions
- What is a 30% margin on $100? If $100 is the price, the profit is $30 and the cost $70. If $100 is the cost, the price for a 30% margin is $100 ÷ 0.70 = $142.86.
- How do I price for a 70% margin? Divide the cost by 0.30. A $9 cost needs a $30 price.
- What is the most I can pay for a $50 product at a 40% margin? $50 × 0.60 = $30.
Which extra costs to enter
Enter costs that happen once per unit sold. Shipping you pay the carrier, the box and filler, a printed insert, and the ad spend it takes on average to get one sale all belong here. To find ad cost per sale, divide the ad spend for the product over a period by the number of units it sold in that period. Monthly costs such as apps, software and rent are fixed costs. Leave them out here and cover them with the break-even calculator, which tells you how many sales you need to pay for them.
Margin vs markup
Margin and markup describe the same profit from two directions, which is why they are so often confused. Margin divides by the price, markup divides by the cost, so markup is always the bigger number.
| Cost | Price | Profit | Markup | Margin |
|---|---|---|---|---|
| $10 | $12.50 | $2.50 | 25% | 20% |
| $10 | $15 | $5 | 50% | 33.3% |
| $10 | $20 | $10 | 100% | 50% |
| $10 | $25 | $15 | 150% | 60% |
| $10 | $40 | $30 | 300% | 75% |
Markup can go above 100%. Margin cannot reach 100% unless the product costs nothing, which is why the calculator refuses a target margin of 100%. To convert quickly, use margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin), with both written as decimals. The markup calculator has a full conversion table.
Warning: Adding 50% to your cost does not give you a 50% margin. It gives you 33.3%. Supplier quotes, pricing rules and spreadsheets mix the two terms all the time, so check which one is meant.
What is a good profit margin?
There is no single number, because it depends on the product, the channel and how much you spend to win each sale. A few useful reference points for online sellers:
- Gross margin for physical products sold online is often in the 40% to 70% range, because fees, shipping, returns and ads still have to come out of it. Handmade and print on demand sellers often see the lower end; private label brands aim higher.
- Net margin after per-sale costs is the number that matters. If it is under about 10% before fixed costs, a price rise, cheaper shipping or lower ad cost per sale is usually needed.
- Is 40% high? As a gross margin for an ad-driven store, 40% is thin. As a net margin after fees, shipping and ads, it is excellent.
Whatever your target, work from the net figure, and leave room for returns and fixed costs.
Margins by business model: worked examples
| Model | Price | Product cost | Fees, shipping, ads per sale | Gross margin | Net margin |
|---|---|---|---|---|---|
| Dropshipped gadget, paid ads | $39.99 | $11.50 | $1.46 fee, $0 shipping (in cost), $14 ads | 71.2% | 32.6% |
| Print on demand T-shirt | $28.00 | $12.95 plus $4.75 shipping | $1.11 fee, $3 ads | 36.8% | 22.1% |
| Handmade candle | $24.00 | $6.00 materials and labor | $1.00 fee, $5.50 shipping, $1 packaging | 75.0% | 43.8% |
| Private label skincare | $45.00 | $7.00 | $1.61 fee, $6 shipping, $12 ads | 84.4% | 40.9% |
In the print on demand row, the shipping charged by the provider is part of the product cost, which is why the gross margin is lower. These are illustrations using a 2.9% + $0.30 fee; plug in your own numbers. The pattern holds, though: a high gross margin can hide a thin net margin once ads enter the picture, and handmade goods with no ad spend often keep the most.
Who uses this calculator
- Shopify and WooCommerce sellers setting prices for a new product or checking a supplier quote.
- Dropshippers checking whether a product can survive its ad cost per sale.
- Etsy and handmade sellers turning material and labor cost into a price.
- Wholesale buyers using price and target margin to find the most they can pay a supplier.
- Freelancers and service sellers checking the margin on a quote.
Best practices
- Set prices from margin, not from cost plus a round number. Decide the net margin you need, then work backwards to the price.
- Include every per-unit cost. For platform-specific fees, use the Shopify fee calculator or the Etsy fee calculator.
- Check margin after discounts. A 20% off sale on a 40% margin product cuts the margin to 25%. Run the sale price through the calculator, or use the discount calculator.
- Know your floor. The price where net profit hits zero is your break-even.
How to raise a thin margin
If the net figure is too low, these levers usually help, roughly in order of effort:
- Raise the price in small steps and watch conversion. A $2 rise on a $30 product adds about 6 points of margin.
- Raise average order value with bundles or a free shipping threshold, so fixed per-order costs are spread over more items.
- Cut ad cost per sale by pausing ads for products that cannot carry them.
- Negotiate or switch suppliers once volume justifies it.
- Trim packaging and shipping with lighter mailers or regional carriers.
Rerun the calculator after each change to see which lever moved net margin most.
Troubleshooting
- "A margin must be below 100%". Only a free product has a 100% margin. Enter a lower target.
- "No price reaches this net margin". The target margin plus the fee percentage is 100% or more. Lower the target or the fee.
- Markup shows n/a. The cost is zero, so markup cannot be calculated.
Common mistakes
- Quoting gross margin as profit. A 60% gross margin can be a 20% net margin, or a loss, once fees, shipping and ads are counted.
- Forgetting the fixed part of the payment fee. $0.30 is 3% of a $10 sale on its own.
- Using averages for ad cost. Ad cost per sale differs by product. Use the figure for the product you are pricing when you have it.
- Updating prices one at a time. Once you know the prices that hit your target, AM Jarvis Bulk Edit Pro changes prices and compare-at prices across many Shopify or WooCommerce products, with a preview before applying and one-click revert.
Everything is calculated in your browser as you type. Nothing you enter is stored or sent anywhere.