Markup is a percentage added on top of the product cost: the net price equals the cost multiplied by one plus the markup. Real margin, on the other hand, is profit divided by the net price, after subtracting cost, shipping and the payment gateway fee —charged on the tax-inclusive total—, so a 30% markup almost never produces a 30% real margin. Example: with a cost of 100,000, no shipping or fee and a 19% tax, targeting a 30% real margin gives a net price of 142,857.14 and a gross price (what the customer pays) of 170,000; with a 30% markup on the same cost instead, the net price comes out to 130,000, but the real margin is only 23.08%.
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Markup is a percentage added directly on top of the product cost, without looking at anything else. Real margin, on the other hand, is profit divided by the sale price, after also subtracting shipping and the gateway fee (tax is not income: you collect it and pass it on). That is why a 30% markup almost never produces a 30% real margin: the margin ends up lower because it absorbs costs the markup never touches.
The textbook formula —markup divided by one plus the markup— assumes the only cost is the product itself. A real business also has shipping, a gateway fee and tax, so that conversion gives a number that does not match what you actually earn. This calculator uses your real cost, shipping, fee and tax so the margin shown is the true one.
It is calculated on the gross price, meaning the full amount the customer pays with tax already included, because that is how payment gateways such as Stripe, Square or PayPal charge: a percentage of the whole transaction. Enter the fee exactly as your gateway charges it, including any tax on the fee, so you do not need to add it separately.
Enter the product cost without tax. The calculator adds the tax rate you set to show you the gross price, which is what the customer actually pays.
Yes, if your business pays for it. The shipping field is the cost you absorb when you ship the order; if the customer pays for shipping separately, leave it at zero.
Informational tool; it does not replace accounting, tax or labor advice.
In Renaska Products & Orders, each product’s real cost is calculated from its recipe of inputs, labor and overhead, and recalculates automatically when an input price or the exchange rate changes, so your catalog margin never goes stale.