Profit Margin Calculator
Profit margin is the percentage of revenue you keep as profit. Gross margin is revenue minus cost of goods; net margin also subtracts operating costs (ads, staff, apps, shipping subsidies). Both matter, but net margin is what actually funds the business.
Profit margin is the percentage of revenue you keep as profit. Gross margin is revenue minus cost of goods; net margin also subtracts operating costs (ads, staff, apps, shipping subsidies). Both matter, but net margin is what actually funds the business.
Gross Margin % = (Revenue − COGS) ÷ Revenue × 100 Net Margin % = (Revenue − COGS − Opex) ÷ Revenue × 100
- Gross margin sets the ceiling on how much you can spend on marketing and still be profitable.
- Two brands with identical revenue and different margins have completely different valuations.
- Margin discipline - not top-line growth - is what separates fundable ecommerce brands from cash-flow disasters.
- Renegotiate supplier and fulfilment contracts once you clear £250k/year - most SMEs overpay.
- Cut the SKU tail: 20% of SKUs usually generate 80% of profit; the rest tie up cash and space.
- Reprice: a 5% price rise on inelastic products can double net margin - test it, don't guess.
- Reduce refund and return rate - sizing, product-page clarity and QC changes pay back fast.
- Move slow-moving inventory before it becomes dead stock and a write-off.
Profit Margin Calculator - questions founders ask
For DTC brands, aim for 60%+ gross margin and 10-20% net margin. Below 50% gross margin, paid acquisition becomes almost impossible to make profitable at scale. Below 5% net margin, you're one bad month away from cash-flow trouble.
Want the operator team behind these numbers?
BeingEcom runs Store Development & Optimisation for UK Shopify and WooCommerce brands. Book a free strategy call and we'll model the same numbers against your real store.