Formulas used by this calculator
- Profit after included cost = selling price − included cost
- Margin (%) = profit after included cost ÷ selling price × 100
- Markup (%) = profit after included cost ÷ included cost × 100
Worked example
An illustrative item sells for $80 and has $50 of included cost. Profit after that cost is $30.
Margin is $30 ÷ $80 × 100 = 37.5%. Markup is $30 ÷ $50 × 100 = 60%. These describe the same transaction from different denominators.
Decide which costs belong in the calculation
Shopify's margin calculator distinguishes margin on selling price from markup on cost. The definition of cost determines which expenses the result covers. Shopify: margin and markup definitions.
If the cost field contains only product cost, the result is before fulfillment, payment charges, advertising, and overhead. If you include more expenses, document them. Calling the result net profit without a complete cost scope would imply more than this worksheet establishes.
Account for the offer actually sold
Use the retained selling price after the discounts in your model. A list price that customers rarely pay can overstate the amount left after cost. Keep refund assumptions explicit and avoid deducting the same expected refund from both price and cost.
For a bundle, use the combined retained selling price and the costs of the complete bundle. A per-product margin copied from one component may miss packaging, shipping, or the way the promotion changes the cost of the basket.
Keep the result separate from an ad-spend allowance
A dollar left after product cost is not necessarily a dollar available for ads. The business may still need to cover other variable costs and retain contribution for operating expenses. Use the break-even ROAS or allowable-CAC calculator for that separate planning question.
Loss-making inputs remain visible: a cost above the selling price produces negative profit and negative percentages when their denominators are positive. The tool does not replace a loss with zero or suggest that a markup alone can fix demand.
Common questions
What happens if cost is zero?
A positive selling price produces a 100% margin on the entered zero cost, but markup is undefined because its denominator is zero. Confirm that a zero cost is real rather than a missing expense.
What happens if the selling price is zero?
Profit is the negative of included cost, and margin is undefined. If cost is positive, markup is -100%. There is no sales-revenue denominator from which to calculate a margin.