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Profit Margin Calculator for Online Stores
Profit margin shows how much of each dollar in revenue you keep. Online stores should track three versions: gross margin, contribution margin and net margin. Each one points at a different lever, from pricing to ad efficiency to overhead.
The formula
Net profit margin = (revenue − all costs) ÷ revenue
How to use this calculator
- Enter revenue for a period, such as last month.
- Add cost of goods sold, then variable costs like shipping, fees and returns.
- Add marketing and fixed costs to get net profit margin.
Want the full picture? Read the guide: Contribution Margin for E-commerce: Formula, Examples and Benchmarks.
Frequently asked questions
What is a good profit margin for an online store?
Many DTC brands run 5–10% net margin. Gross margins of 50–70% are common for own-brand products, while resellers and dropshippers often sit at 20–40%.
How do I calculate profit margin?
Subtract the relevant costs from revenue and divide by revenue. For net margin, subtract every cost. For gross margin, subtract only product cost.
Which margin should I use to judge ads?
Contribution margin before marketing. It tells you how much you can afford to spend to win an order, which sets your break-even ROAS.
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