Free Tool
Free Profit Margin Calculator
Calculate gross margin, net margin, full unit cost and break-even units for any product. Built for Shopify brands importing from overseas. No signup required.
What does this calculator do?
This profit margin calculator goes beyond a simple gross margin figure. It accounts for your full unit cost (unit price + shipping + import duty + packaging), marketing spend per unit and platform fees, so you can see your net margin per unit for each product. Run it once for each product, or each market you sell in, to compare margins side by side.
Enter your product details
The retail price your customers pay, excluding VAT.
Your factory or supplier price per unit. This is the ex-works cost before shipping, duty and packaging.
International and domestic freight allocated per unit. Divide your total shipping cost by units in the shipment.
The import duty rate that applies to your product category. Check the UK Trade Tariff for your commodity code.
Boxes, tissue paper, inserts, labels and any branded packaging allocated per unit.
Your average paid media spend (Meta Ads, Google) divided by units sold. Calculate as total monthly ad spend ÷ monthly units sold.
Enter the total % of your selling price paid in payment and platform fees. Check your Shopify plan and payment provider for your current rates.
Your total monthly overheads: rent, salaries, software and so on. Used to calculate your break-even units per month.
Enter your selling price above to see your profit margins.
Gross margin vs net margin: what's the difference?
Gross margin
Gross margin measures what you keep after paying for the product itself: your full unit cost (factory price, freight, duty, packaging). It tells you how efficient your sourcing is. A 50% gross margin means for every £1 of revenue, 50p covers the product and 50p is available to cover everything else.
Net margin
Net margin is your real profitability after every cost: COGS, marketing spend, platform fees, fulfilment and overheads. A product with a high gross margin but heavy ad spend can end up with a thin net margin. Net margin is the number that shows whether a product actually makes money. Stock that never sells earns no margin at all, which is why it pays to identify dead stock early.
Example
Illustrative numbers: a product sells for £40. Its full unit cost is £12, marketing is £8 per unit and platform fees are £1.20. Gross margin = (£40 − £12) ÷ £40 × 100 = 70%. Net margin = (£40 − £21.20) ÷ £40 × 100 = 47%. Then check how long your stock lasts at your current sales rate.
Know the cash each restock needs
Canopy Inventory shows the cash needed to restock each SKU, at your Shopify cost per item. It is a read-only Shopify app, now coming soon to the Shopify App Store.
Profit margin: frequently asked questions
There is no single right answer. Margins vary a lot by category, price point and how much you spend on marketing. The more important number is net margin: the profit left after every cost, including marketing spend, platform fees and fulfilment. Use this calculator to see both gross and net margin for each product, then check that net margin covers your fixed costs.
Gross margin is revenue minus the cost of goods sold (COGS), expressed as a percentage. It measures production efficiency. Net margin is revenue minus all costs (COGS, marketing, platform fees, fulfilment and overheads) and is the true profitability measure. A product can have a high gross margin but a low net margin if marketing costs are high. Many ecommerce brands focus on gross margin and are surprised by their actual profitability.
Full unit cost is the total you pay to get one unit from your supplier to your warehouse: the unit purchase price, international shipping, import duty, packaging and currency conversion. For brands importing goods, it can be much higher than the factory price alone. Calculating margin against the factory price rather than the full unit cost is a common mistake: it makes products look more profitable than they are. You work this figure out yourself from your supplier invoices and shipping bills; this calculator then uses it.
Break-even units per month = monthly fixed costs ÷ net profit per unit. For example, if your fixed monthly costs (rent, salaries, software) are £10,000 and your net profit per unit sold is £5, you need to sell 2,000 units per month to break even. This calculator estimates break-even using your fixed costs if provided, or shows the per-unit metrics so you can apply them to your own fixed cost base.
Yes. Platform fees (your Shopify subscription and payment processing) and fulfilment costs reduce margins and are often left out of product-level calculations. For example, at an illustrative 3% processing fee, a £50 sale costs £1.50 in fees before you've covered any other cost. Check your own plan and payment provider for your current rates, and always include them in your net margin calculation.
Related tools and guides
Calculate your weeks of cover, run-out date and recommended order quantity.
Calculate your reorder point with safety stock and demand variability.
Ordering calendars, MOQs and long lead times for brands buying from overseas suppliers.
Know what to reorder, and the cash it needs
Canopy Inventory shows when each product runs out, what to reorder, and the cash needed to restock each SKU, at your Shopify cost per item.