How to Use the Profit Margin Calculator
Pricing your products correctly is the difference between a thriving business and a failing one. Our free Profit Margin Calculator takes the guesswork out of your pricing strategy. Simply enter your item's cost and your intended selling price to instantly see your gross profit, profit margin percentage, and markup percentage.
The Math Behind the Calculator
Understanding the formulas empowers you to make better pricing decisions:
- Gross Profit = Sale Price - Item Cost
- Profit Margin (%) = (Gross Profit / Sale Price) × 100
- Markup (%) = (Gross Profit / Item Cost) × 100
Margin vs. Markup: The Common Trap
Many beginners confuse margin and markup. If you buy an item for 50 and sell it for 100, your markup is 100%, but your profit margin is 50%. Always talk in terms of margin when discussing business profitability!
Why track margins per item?
Not all products are created equal. You might have a "cash cow" item with a 70% margin, and a "loss leader" with a 5% margin. If you don't track the profitability of individual SKUs, you might accidentally scale the marketing for unprofitable items or underprice your best sellers.
Tired of calculating margins manually?
Stash automatically tracks profit margins across your entire inventory. See your most profitable items at a glance and never sell at a loss again.
Automate Your Inventory