How to calculate profit margin: formula and examples

Profit margin is the share of the selling price left after costs. The formula is: profit margin = profit / selling price × 100. A R$100 sale with R$70 in total costs creates R$30 profit and a 30% margin. Use the profit margin calculator to also find markup and target price.

The basic formula is simple: net profit divided by selling price. If you sell for R$100 and keep R$20 after all costs, your net margin is 20%.

Margin versus markup

Markup starts from cost. Margin starts from selling price. If a product costs R$60 and you sell for R$100, the markup is 66.7%, but the margin is 40%. They describe the same sale from different angles.

This difference matters because many marketplaces charge fees over the sale price, not over the cost. Pricing only with markup can hide the real margin.

Costs that must enter the margin

• Product or material cost.
• Packaging and labels.
• Marketplace commission and payment fees.
• Freight subsidies and shipping adjustments.
• Taxes and invoice costs.
• Discounts, coupons, returns and losses.
• Your time, if the product requires manual work.

How to avoid false profit

Use a calculator before setting price. The Shopee margin calculator helps simulate product cost, commission, freight, tax and target margin. Even outside Shopee, the logic helps structure the pricing calculation.