How to calculate profit margin
Profit margin is profit divided by the selling price. If something costs you $10 and sells for $25, the profit is $15 and the margin is $15 ÷ $25 = 60%.
This is gross margin: it uses the cost of the item itself. To see your net margin, add selling fees, shipping and other costs to the cost cell.
Price for a target margin
To hit a margin, divide the cost by one minus the margin. For a 40% margin on a $10 cost: $10 ÷ (1 − 40%) = $16.67. Adding 40% to the cost gives $14, which is only a 28.6% margin.
Margin vs markup
Margin compares profit with the price. Markup compares profit with the cost. The same $10 item sold for $25 has a 60% margin and a 150% markup. A margin can never reach 100%, but a markup can go as high as you like.
The formulas behind it
Every result cell is a plain spreadsheet formula, so you can check the math or rebuild it yourself.
| Cell | Result | Formula |
|---|---|---|
| B7 | Gross profit | =B3-B2 |
| B8 | Profit margin | =B7/B3 |
| B9 | Markup | =B7/B2 |
| B10 | Price for your margin | =B2/(1-B4%) |
| B11 | Profit at that price | =B10-B2 |