How to Use This Calculator
- Enter your product's Selling Price (the price you list on Shopify)
- Enter your product's Cost Price (the price you pay to acquire or produce the product)
- Click the Calculate button to see your profit margin, gross profit, and markup percentage
Understanding the Results
- Gross Profit Margin (%): This shows what percentage of your selling price is profit after covering your cost. A higher margin means more profit per sale.
- Gross Profit ($): This is the actual dollar amount of profit you make on each product sold.
- Markup (%): This shows how much more you're selling your product for compared to its cost. It's calculated as (Profit / Cost Price) * 100.
Example Scenario
Suppose you sell a t-shirt for $25 (Selling Price) and it costs you $10 to produce (Cost Price):
- Gross Profit Margin: (($25 - $10) / $25) * 100 = 60%
- Gross Profit: $25 - $10 = $15
- Markup: (($25 - $10) / $10) * 100 = 150%
Optimizing Your Pricing
This calculator helps you:
- Compare profitability across different products
- Determine if your prices are competitive
- Understand how discounts affect your margins
- Set optimal prices for new products