Ecommerce Guide

Ecommerce Margin Calculator: Price Your Products for Profit

By Rahul Kumar | Last Updated: December 2025

Ecommerce Margin Concept

Running an ecommerce business on Amazon, Flipkart, or Shopify is not just about sales volume; it's about Net Profit. Many new sellers fail because they confuse "Markup" with "Margin" and end up pricing their products too low to cover fees, shipping, and returns.

Our Ecommerce Margin Calculator helps you find the exact selling price you need to set to achieve your desired profit goals.

Table of Contents

1. The Big Confusion: Margin vs Markup

This is the #1 mistake sellers make. Let's clear it up once and for all.

A. What is Markup?

Markup is the percentage you add to your Cost Price to get the Selling Price.

Cost = ₹100
You want to add ₹50 profit.
Markup = 50% (50 is 50% of 100)

B. What is Gross Margin?

Margin is the percentage of the Selling Price that is profit. This is what actually matters for your bank account.

Selling Price = ₹150
Profit = ₹50
Margin = 33.3% (50 is 33.3% of 150)

The Trap: If you want a 30% margin, you cannot just add a 30% markup. If you add 30% markup to ₹100, you sell at ₹130. Your profit is ₹30. But ₹30 is only 23% of ₹130, not 30%!

2. Why Ecommerce Sellers Need This Tool?

When selling on platforms like Amazon or Flipkart, your "Selling Price" is eaten up by multiple deductions:

  • Referral Fees: (5% to 15% depending on category)
  • Closing Fees: Fixed fee per order.
  • Shipping Cost: Weight-based charges.
  • GST: 18% on service fees.

If you don't calculate your margin correctly, you might be making a sale but actually losing money on every order.

3. How to Calculate Selling Price? (Formulas)

If you want to achieve a specific Gross Margin (say 20%), here is the formula to find the correct Selling Price:

Selling Price = Cost Price / (1 - (Margin% / 100))

Example:
Product Cost = ₹500
Desired Margin = 20% (0.20)
Selling Price = 500 / (1 - 0.20) = 500 / 0.80 = ₹625

4. How to use our Margin Calculator?

Stop doing mental math and avoid costly errors. Use our free tool:

  1. Enter Cost: Your product sourcing cost + packaging + shipping.
  2. Enter Desired Margin: How much % profit you want to keep (e.g., 20%).
  3. Click Calculate: The tool will show you the Revenue (Selling Price) and the Profit Amount.
Open Margin Calculator

5. Hidden Ecommerce Fees to Consider

Before you enter your "Cost" into the calculator, make sure you add ALL these expenses:

  • Product Sourcing Cost: Manufacturing or wholesale price.
  • Packaging Material: Box, tape, label, bubble wrap.
  • Shipping Cost: Courier charges (if free shipping is offered).
  • Marketing Cost: PPC Ads (Amazon/Facebook Ads cost per sale).
  • Return Loss Buffer: Add 5% extra to cover potential returns.

6. Frequently Asked Questions (FAQs)

Generally, a Net Margin of 15-20% is considered healthy for private label businesses. For dropshipping, margins are usually lower (10-15%).

No. Profit is the actual money (₹) you make. Margin is the percentage (%) of the selling price that is profit.

Yes! The formula for Margin and Markup works exactly the same for offline shops, wholesalers, and manufacturers.

Stop Guessing, Start Profiting!

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