Use the margin calculator below to find your profit margin based on existing retail price and wholesale (or cost) price, or the reverse margin calculator to find what wholesale price you need to negotiate in order to get the margin you want.
💡For when we want to know: The % profit margin we'll make when we sell a product to the end customer
📋 And we already know: The wholesale price (or cost price), and the recommended retail price
Reverse margin calculator:
💡For when we want to know: The wholesale price (or cost price) we need in order to get the profit margin we want based on the retail price
📋 And we already know: The retail price and the desired profit margin
1. What is margin?
When we talk about a product’s margin, aka profit margin, we’re talking about how much lower the wholesale (or cost) price of the product is than what it sells for. So essentially, it’s finding the product’s profit and expressing this into a percentage of the retail price.
📚 Bookmark for later: Markup vs Margin: What's the Difference? (With Calculator)
2. What's the formula for calculating margin?
The formula for calculating margin (profit margin) for a product is:
Margin (%) = (Retail price — wholesale or cost price) / retail price x 100
3. As a retailer, what's a good margin?
When you’re looking to shop wholesale products to sell in your store, you’ll want to check that the margin makes it a viable — and profitable — item to stock.
What makes a ‘good’ margin partly depends on your business and the overheads you’re dealing with. While the calculations above only take into account the product cost rather than your other fixed costs, when you look at your business as a whole, this is something you need to consider.
We often hear from retailers (particularly brick and mortar ones with higher costs) that they underestimated the margins they needed to look for when they first started out.
A ‘good’ margin also varies by product category. Perishable items, like food, generally need a higher margin as there’s a time limit on when they can be sold. Fashion products also ideally need a higher margin — the products won’t literally expire, but they’ll still need clearing out ahead of the new season.
Take a look at our guide to buying wholesale for more tips on what makes a good margin for your product.