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Gross Margin Calculator

Put in your selling price and costs to see your gross margin, your markup, and what you really keep on each sale once VAT, platform fees, delivery and advertising come off.

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  • Margin and markup side by side
  • Allows for VAT and platform fees
  • Free, no sign-up

In short

Gross margin is gross profit as a percentage of the net selling price: (net price minus cost of goods) divided by net price. For a VAT-registered seller, the net price is the selling price without VAT. This calculator also shows markup, which is gross profit as a percentage of cost, and the margin left after platform fees, delivery and advertising, so you can see what each sale actually earns.

Works with the platforms and software you already use

Trademarks belong to their owners. eCounts is independent and not endorsed by these platforms.

Work out your margin

Are you VAT-registered?
VAT-registered sellers keep five sixths of a 20% VAT-inclusive price. The rest is VAT owed to HMRC.

Your margins

Gross margin

0%

Markup

0%

Net sale price
£0.00
Gross profit
£0.00
Fees, delivery and ads
£0.00
Profit per sale after costs
£0.00
Margin after costs
0%

Price needed for your target margin: £0.00

Gross margin compares the net sale price with cost of goods only. Margin after costs also takes off fees, delivery and advertising. An estimate for planning, not financial advice.

Get your real margins by product

The formula

How to calculate gross margin

Gross margin answers one question: of every pound you sell, how much is left after the cost of the product itself? The formula is:

Gross margin = (net selling price − cost of goods) ÷ net selling price × 100

The net selling price is what you keep from the sale before costs. If you are VAT-registered, that is the price without VAT: a £29.99 product at the 20% standard rate has a net price of £24.99. If you are not registered, it is the full price.

The cost of goods should be your landed cost per unit: the supplier price plus freight, insurance and import duty. Leaving out freight and duty is the most common reason margins look healthier than they are. Our import duty calculator works out landed cost per unit for a shipment.

Margin vs markup

Margin and markup are not the same

Margin is profit as a share of the price. Markup is profit as a share of the cost. Mixing them up is one of the easiest ways to under-price.

Markup on costGross marginExample: cost £10, net price
25%20.0%£12.50
50%33.3%£15.00
100%50.0%£20.00
150%60.0%£25.00
200%66.7%£30.00

To turn a markup into a margin: margin = markup ÷ (1 + markup). A 100% markup is a 50% margin, not 100%.

Beyond gross margin

Why gross margin is not the whole story for online sellers

Gross margin only takes off the cost of the product. Online sellers pay a second layer of costs on every order: marketplace commission and payment fees, delivery and packaging, and the advertising it took to win the sale. A product with a 60% gross margin can still lose money once those are taken off.

That is why the calculator also shows your margin after costs: what is left from the net price once fees, delivery and advertising are paid. It is the number that tells you whether a product is worth selling, and the one to compare across channels.

For channel-specific fees, use the profit calculators on our Amazon, Shopify, eBay, Etsy and TikTok Shop pages, which have each platform's fees built in.

Top tips

Four ways to protect your margin

  1. 01

    Use landed cost, not the supplier price

    Freight, insurance and duty belong in cost of goods. A cost that rises with each shipment needs updating every time you reorder.

  2. 02

    Check margin by product and by channel

    The same product can earn very different margins on Amazon and on your own site. Average margins hide the products that lose money.

  3. 03

    Price for VAT before you register

    Once you are VAT-registered, a sixth of a VAT-inclusive price goes to HMRC. Plan prices before you cross the threshold, not after.

  4. 04

    Set a minimum margin after costs

    Decide the lowest margin after fees, delivery and ads you will accept, and use the target price in the calculator to test new products against it.

Want your real margin on every product?

We build margin by product and by channel from your reconciled sales and landed costs, every month.

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Frequently asked questions

Can’t see your question? We’re happy to talk it through.

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What is a good gross margin for an online seller?
It depends on the product and channel, so there is no single figure. What matters more is the margin left after platform fees, delivery and advertising, which needs to be high enough to cover your overheads and leave a profit.
Should I include VAT when calculating gross margin?
No. If you are VAT-registered, calculate margin on the price without VAT, because the VAT belongs to HMRC. If you are not registered, use the full selling price.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price, while markup is profit as a percentage of cost. A product that costs £10 and sells for £20 net has a 50% margin and a 100% markup.
What costs go into cost of goods sold?
For a product you buy in, cost of goods is the landed cost: the supplier price plus freight, insurance and import duty. Platform fees, delivery to customers and advertising are selling costs, which the calculator shows separately.
How do I work out the price I need for a target margin?
Enter your costs and a target margin, and the calculator solves for the selling price. It allows for VAT and percentage-based fees, which rise with the price.

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