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What is Profit Margin?

Profit margin is one of the most critical metrics for any business, especially in eCommerce (Amazon FBA, Shopee, TikTok Shop). It represents the percentage of revenue that remains as profit after all costs have been deducted.

The formula for Net Profit Margin is:
((Revenue - COGS - Expenses) / Revenue) * 100

Margin vs. Markup: What's the Difference?

Many new sellers confuse these two terms, leading to pricing errors.

• Markup is how much you add to the cost price to get your selling price. (e.g., Cost $10 + 50% Markup = $15 Price).
• Margin is the profit percentage of the final selling price. (e.g., Selling for $15 with $10 cost = 33% Margin).

Tip: Always focus on Margin for financial health. A 50% markup does not mean a 50% profit margin!

How to Use This Calculator

Our MarginMate tool is designed to catch hidden fees that eat into your profits. Here is a step-by-step guide:

1. Input Product Costs (COGS): Enter the manufacturing unit cost, packaging materials, and shipping freight from supplier to warehouse.
2. Select Your Platform: Choose Amazon, Shopee, or TikTok. The calculator automatically suggests standard referral fees (e.g., Amazon's typical 15%).
3. Add Marketing Costs: Don't forget Ads! If you spend $100 on ads to sell 10 units, your "Ads / Unit" cost is $10.
4. Analyze the Result: Look at the Net Profit and Margin %. If your margin is below 15%, consider renegotiating with suppliers or increasing your price.

Why Tracking Profit Margin is Vital

In the competitive world of e-commerce, cash flow is king. High revenue does not guarantee survival if your margins are too thin. By accurately calculating your break-even point and net margins, you can make informed decisions about which products to scale and which to discontinue. This tool helps you prevent selling at a loss due to overlooked platform fees, taxes, or rising ad costs.