How do I calculate a product's margin?
Divide a clearly defined profit measure by corresponding net revenue and multiply by 100. This tool reports contribution margin after entered variable costs.
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Margin & ROI Calculator™
Separate contribution margin, cost markup and a return calculated from a stated net return.
Calculate nowWhat problem does this tool solve?
Margin and markup have different denominators. ROI also needs invested capital and attributable net return; it cannot be inferred from margin alone.
What do you get?
Contribution per unit, margin, markup and optional totals and ROI from your inputs.
Practical questions on this topic
How is margin different from markup?
Margin uses the sale price as denominator; markup uses the cost base. The same contribution therefore produces two different percentages.
What is a good margin for an online store?
There is no universal target. Returns, category, fixed costs, competitive position and sales volume determine what is viable.
How can I improve contribution margin?
Review sourcing terms, variable fulfillment costs, prices and product mix. Test changes against real demand and sales.
Why might ROI be low despite a healthy margin?
High capital tied up in stock, slow turnover or additional costs can reduce the return attributable to invested capital.
What does 100 sales contribute?
Multiply contribution per unit by 100. Do not label the total as business profit until fixed costs and other expenses are considered.
Frequently asked questions
Can the result be negative?
Yes. A negative contribution is clearly flagged.
Is ROI the same as margin?
No. ROI relates attributable net return to capital; margin relates contribution to sales revenue.
Can I compare products?
Yes. Save local calculations using the same method for each product.
Does it include taxes?
Sales input is net. Other taxes count only if already reflected in the costs or net return you enter.
Can I copy the calculation?
Yes. You can copy the values together with the input assumptions.
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