# Profit margin calculator

This easy calculator will help you determine selling prices for your products in order to save money and increase profits

Cost of item you are going to resell
Markup percentage that is used to determine your selling price

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## Need to develop an effective pricing strategy for your business? First, you’ll need to figure out your markups and profit margins.

To start, simply enter your gross cost for each item and what percentage in profit you’d like to make on each sale. After clicking “calculate”, the tool will run those numbers through its profit margin formula to find the final price you should charge your customers.

From there, you can effectively price your products and start profiting off each sale.

## FAQs

Profit margin indicates the profitability of a product, service, or business. It’s expressed as a percentage; the higher the number, the more profitable the business.

It’s simple to find gross profit margin automatically using the calculator. To calculate manually, subtract the cost of goods sold (COGS) from the net sales (gross revenues minus returns, allowances, and discounts). Then divide this figure by net sales, to calculate the gross profit margin in a percentage.

Shopify’s free profit margin calculator does it for you, but you can also use the following formula:

1. Step 1: X (Net sales) - Y (COGS) = Z
1. Step 2: Z / X (Net sales) = % Gross profit margin

Follow these easy steps to calculate a 20% profit margin:

• 1. Use 20% in its decimal form, which is 0.2.
• 2. Subtract 0.2 from 1 to get 0.8
• 3. Divide the original price of your good by 0.8
• 4. The resulting number is how much you should charge for a 20% profit margin

Shopify’s free profit margin calculator is fast and easy to use, to get started:

• 1. Go to shopify.com/tools/profit-margin-calculator
• 2. Enter your information into the online form
• 3. Click “Calculate profit”

The profit margin calculator is a free tool Shopify offers to businesses. That means there is no cost to use it.

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