A selling price can look healthy until shipping, payment fees, and advertising are included. Use this free profit margin calculator to compare product gross margin with contribution after the variable costs you enter. It works for Amazon sellers, independent ecommerce stores, retailers, and service businesses.
How to use this calculator
Enter your selling price and product cost in the same currency. Add per-sale shipping, fixed fees, percentage selling fees, and advertising. Set the contribution margin you want to retain. Currency changes the display only; convert your costs before entering them.
Formula and assumptions
Gross margin = (price − product cost) ÷ price × 100. Markup = (price − product cost) ÷ product cost × 100. Contribution = price − product cost − shipping − fixed fees − advertising − percentage fees. Target price = fixed per-sale costs ÷ (1 − fee rate − target margin).
Worked example
At a $50 price, $20 product cost, $5 shipping, 3% selling fee, $0.30 fixed fee, and $8 advertising cost, contribution is $15.20 per sale, or 30.4%. Product markup is 150%. A 20% contribution target requires about $43.25 under the same cost assumptions.
Common questions
Why are margin and markup different?
Margin divides profit by selling price; markup divides it by cost. A $20 item sold for $50 has a 60% product gross margin and a 150% markup, before other selling costs.
Is contribution the same as business net profit?
No. Contribution is what remains to pay fixed overhead and profit. This calculator excludes rent, salaries, financing, and income tax unless you explicitly allocate relevant costs to its inputs.
