Start from an example:
Per unit
$
Everything it costs you to sell one unit.$
Volume (optional)
units
How profit margin is calculated
Margin
(price − cost) ÷ price × 100The share of each sale you keep as profit. It can never reach 100%.
Markup
(price − cost) ÷ cost × 100How much you add on top of cost. The same sale always has a higher markup than margin.
Price for a target margin
cost ÷ (1 − margin)For a 40% margin on a ¥87 cost: 12 ÷ 0.6 = ¥145.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by price; markup divides it by cost. A ¥73 cost sold at ¥145 is a 50% margin and a 100% markup.
What is a good profit margin?
It depends on the business. Many online sellers aim for 30% or more per unit before ads so there is room for marketing and returns.
What should I include in cost?
Everything you pay to sell one unit: product, packaging, shipping, platform fees and payment fees.