The Retail Margin Estimator calculates gross margin from selling price and product cost, with an optional allowance for per-unit selling fees. It helps retailers distinguish margin from markup and see the amount retained from each unit sale before overhead.
The results can be used to review pricing, compare products, or test how marketplace and payment fees affect unit economics. The calculation is performed per unit, so taxes and fixed operating expenses are outside the model.
1. Enter the selling price
Use the actual amount charged per unit before any tax collected separately.
2. Add product cost
Enter the direct acquisition or manufacturing cost for one unit.
3. Include selling fees
Use the percentage fee charged on the selling price.
4. Add other unit costs
Include packaging, fulfillment, or other variable amounts not in product cost or fee rate.
5. Review margin and markup
Margin divides contribution by selling price; markup divides price gain by product cost.
Formula:
Selling fee = Selling price × Fee rate ÷ 100 Unit contribution = Selling price − Product cost − Selling fee − Other unit cost Gross margin = Unit contribution ÷ Selling price × 100 Markup = (Selling price − Product cost) ÷ Product cost × 100Markup excludes the fee and other unit cost so it remains a direct price-to-product-cost comparison.
The main result is the percentage of selling price left after the entered per-unit costs and percentage fee.
Fixed costs, returns, discounts, and taxes are not included.
Given
A $60 selling price, $32 product cost, 4% selling fee, and $3 other unit cost.
Calculation
Selling fee = $60 × 4% = $2.40 Unit contribution = $60 − $32 − $2.40 − $3 = $22.60 Gross margin = $22.60 ÷ $60 × 100 = 37.67%Result
The gross margin after entered fees and costs is 37.67%.
Margin measures profit contribution as a percentage of selling price. Markup measures the price increase relative to product cost.
Include shipping when the retailer bears it and it varies by unit. Exclude customer-paid shipping that is fully offset by shipping revenue unless you want to model both sides.
The calculator reports a zero margin to avoid division by zero, but a zero-price item should be evaluated as a promotion or cost rather than a normal sale.
Yes. Negative margin means the entered variable costs exceed the selling price.
No. Net profit also reflects fixed operating expenses, interest, taxes, and other business-level items.