Free Profit Margin Calculator

How the calculator works

Free profit margin calculator: see the contribution margin each sale leaves after product cost, other costs and selling fees. Prices excluding VAT.

Contribution per unit is the selling price minus the product cost, your other per-unit costs, and the selling fees charged as a percentage of that price. Contribution margin is that contribution as a percentage of the selling price.

With Multiple products you can work out up to 10 products at once, each with its own quantity, in one selling currency. A product bought in another currency uses the exchange rate you enter, written as 1 unit of the purchase currency = your rate in the selling currency. Markup on purchase cost is the selling price minus the purchase cost (after conversion), as a percentage of that purchase cost; other costs and selling fees are not deducted from it, so it is neither net profit nor the contribution margin. The overall contribution margin is the total contribution divided by the total sales revenue, so products with more sales count for more.

Worked example

A product sells for EUR 40, excluding VAT. It costs EUR 18 per unit, plus EUR 5 of other costs per unit for shipping and advertising. Marketplace and payment fees add up to 13% of the price.

• Selling fees at EUR 40: EUR 5.20
• Total included costs per unit: EUR 28.20
• Contribution per unit: EUR 11.80, a contribution margin of 29.5%

The figures are illustrative. Use your own costs and fees.

Contribution margin is not net profit

Contribution margin shows what each sale leaves after the costs that come with it. It does not include fixed costs such as rent, salaries, software or financing, or any cost you leave out. A healthy contribution margin is a starting point, not proof the business is profitable. For a fuller view of what to include, see how to calculate true profit margin before selling.

When you need more than a margin

This calculator answers one question: the contribution margin your products leave at the prices, costs and fees you enter. Real decisions often need more: the price that reaches your target, the freight and customs duty that make up the landed cost, returns, and costs that change before you sell. That is what the MarginGuides Decision Engine is for: Analyze and the decision tools. Before you place an order, see how to evaluate a supplier quote.

More free calculators

• Break-Even Advertising Calculator: the return on ad spend a product needs before advertising starts costing you money.
• Free Landed Cost Calculator: what each unit really costs once a shipment has arrived.

All of them are in the Free Calculators collection, and one free account works for every one.

Frequently asked questions

What is contribution margin?

Contribution margin is the share of the selling price left after the variable costs of selling one unit: the product cost, other per-unit costs such as shipping, packaging and advertising, and percentage selling fees such as marketplace and payment fees. It is what each sale contributes towards fixed costs and profit.

Is contribution margin the same as net profit?

No. Contribution margin leaves out fixed costs such as rent, salaries, software and financing, and any cost you did not enter. Net profit is what remains after all of those. This calculator shows contribution margin only.

Should I enter prices with or without VAT or sales tax?

Without. Profitability is measured on net, tax-exclusive amounts: VAT, GST or sales tax collected from customers passes through to the tax authority, so enter the selling price and your costs excluding it. If an indirect tax is genuinely not recoverable for your business, it is a real cost: include its amount in the relevant cost field, such as product cost or other costs per unit. The calculator does not calculate tax.

What counts as other costs and selling fees?

Other costs are every per-unit cost besides the product itself, added together: shipping, fulfillment, packaging, advertising per unit and similar. Selling fees are the fees charged as a percentage of the selling price, added together into one total: marketplace or referral fees, payment processing and sales commission.

Why do I need an account to see the result?

The calculator is free, and so is the account. One free MarginGuides account works for every MarginGuides Free Calculator, with no limit on how often you calculate. The result is calculated by the MarginGuides financial engine for signed-in users. Creating an account is free and does not start a paid subscription.

Can MarginGuides go further than this calculator?

Yes. This calculator answers one question. MarginGuides Analyze works out break-even and target selling prices, and adds purchase costs in another currency with your own exchange rate, customs duty, tax and returns. Its decision tools test how far costs can move before a deal falls below your target.