Margin calculator
Margin (the German “Handelsspanne”) is the share of the net selling price that remains after deducting the purchase price. Markup relates the same gross profit to the purchase price instead. Calculate both net or gross of VAT, and see what is left after shipping, fees and advertising costs.
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Calculate margin online
Enter purchase and selling price per unit; the calculation always uses the net selling price. The example values show what the result looks like.
Cost of goods without deductible input VAT. Without input VAT deduction (small business) enter the price including VAT.
Price in your shop; below you choose whether it is gross or net.
19% standard rate, 7% reduced, 0% e.g. for small businesses.
optional. Net: shipping and packaging, payment and marketplace fees, returns share, attributable advertising costs.
optional. Used for the price suggestion in the result; 0 to under 100%.
Enter the values on the left.
The result appears here, with the working. Nothing is stored.
Definition first
The formulas for margin and markup
The Gabler Wirtschaftslexikon (German) describes the Handelsspanne as the difference between cost and selling price and the Kalkulationsaufschlag as the percentage increase of the cost price. For an exact gross profit the VAT is removed from the selling price.
Gross profit per unit Margin Gross profit ÷ net selling price × 100
Markup Gross profit ÷ purchase price × 100
Convert markup to margin Markup ÷ (100 + markup) × 100
Conversion
Markup and margin compared
The most common pricing mistake: a markup of 100% is not a margin of 100% but of 50%. The table converts typical markups.
| Markup on the purchase price | Margin on the net selling price |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
| 300% | 75% |
Net and gross
Why you calculate with net prices
You pass the VAT in the selling price on to the tax office; it is not income. If you calculate with the gross price, the margin looks too high by the tax share.
- Gross to net: Gross price ÷ (1 + tax rate). Example: €59.50 ÷ 1.19 = €50.
- Tax rate: In Germany 19% or, reduced, 7% apply. For EU distance sales the rate of the destination country may apply – more in the OSS guide.
- Small businesses: Without VAT shown on invoices choose 0% and enter the purchase price including VAT, because no input VAT deduction is possible.
E-commerce costs
What still comes off after gross profit
In online retail shipping, fees and returns also cost money on every order. A high margin can shrink quickly after these costs, which is why the calculator shows both values.
| Cost block | Typical content per order |
|---|---|
| Shipping & packaging | Postage, packaging material and volume-dependent fulfilment services |
| Payment fees | Percentage and fixed fees charged by payment providers per order |
| Marketplace & platform fees | Sales commissions and transaction-dependent platform costs |
| Returns | Return shipping, handling and goods that can no longer be sold, spread across all sales |
| Advertising costs | Attributable costs per order if you want to measure margin after marketing |
Worked example
A product at €59.50 gross
An illustrative example with 19% VAT, a €20 purchase price and €12 other variable costs per unit.
- 1. Net selling price: €59.50 ÷ 1.19 = €50.00
- 2. Gross profit: €50.00 − €20.00 = €30.00
- 3. Margin and markup: 60.0% margin, 150.0% markup
- 4. After variable costs: €18.00 per unit, which is 36.0% of the net selling price
FAQ
Frequently asked questions about margin
How do I calculate margin?
Margin in percent = (net selling price − purchase price) ÷ net selling price × 100. With a net selling price of €50 and a purchase price of €20, €30 gross profit remains, which is a margin of 60%.
What is the difference between margin and markup?
Both use the same gross profit but a different base: margin relates it to the net selling price, markup to the purchase price. A markup of 150% therefore equals a margin of 60%.
Do I calculate margin with gross or net prices?
With net prices. As a business you pass on the VAT in the selling price; it is not income. A gross price of €59.50 contains €9.50 VAT at 19% and €50 net revenue.
What is a good margin in e-commerce?
There is no universal value. What matters is what is left after shipping, payment and marketplace fees, returns and advertising costs, and whether that covers your fixed costs. Only compare margins on the same cost basis.
How do I find the selling price for a target margin?
Net selling price = (purchase price + variable costs) ÷ (1 − target margin). For a 40% target margin with €32 costs that gives €53.33 net, or €63.47 gross at 19% VAT.
From margin to contribution margin
Margin shows the gross profit per unit. Whether enough is left after all variable costs to cover your fixed costs is shown by the contribution margin. NorthProfit can bring these values together per order from connected data sources; completeness depends on the available sources and maintained costs.