function calculateEcomProfit() {
var cost = parseFloat(document.getElementById('costPrice').value) || 0;
var sell = parseFloat(document.getElementById('sellingPrice').value) || 0;
var shipping = parseFloat(document.getElementById('shippingCost').value) || 0;
var feePercent = parseFloat(document.getElementById('feePercentage').value) || 0;
if (sell <= 0) {
alert('Please enter a valid selling price.');
return;
}
var feeAmount = sell * (feePercent / 100);
var totalExpenses = cost + shipping + feeAmount;
var profit = sell – totalExpenses;
var margin = (profit / sell) * 100;
var markup = (profit / cost) * 100;
// Break-even calculation: Sell = Cost + Shipping + (Sell * Fee%)
// Sell – (Sell * Fee%) = Cost + Shipping
// Sell * (1 – Fee%) = Cost + Shipping
var breakeven = (cost + shipping) / (1 – (feePercent / 100));
document.getElementById('netProfitDisplay').innerHTML = '$' + profit.toFixed(2);
document.getElementById('grossMarginDisplay').innerHTML = margin.toFixed(2) + '%';
document.getElementById('markupDisplay').innerHTML = isFinite(markup) ? markup.toFixed(2) + '%' : 'N/A';
document.getElementById('breakevenDisplay').innerHTML = '$' + breakeven.toFixed(2);
document.getElementById('profitResult').style.display = 'block';
if (profit < 0) {
document.getElementById('netProfitDisplay').style.color = '#e74c3c';
} else {
document.getElementById('netProfitDisplay').style.color = '#27ae60';
}
}
Understanding E-commerce Profit Margins
In the world of online retail, simply looking at the difference between your buy price and sell price isn't enough. To run a sustainable business, you must account for "hidden" variables like shipping costs, payment processing fees (Stripe/PayPal), and customer acquisition costs (Ads).
The Profit Margin Formula
Net Profit = Selling Price – (Cost of Goods + Shipping + (Selling Price * Fee %))
Gross Margin % = (Net Profit / Selling Price) * 100
Realistic Example
Suppose you are dropshipping a fitness tracker:
- ✅ Product Cost: $20.00 (from supplier)
- ✅ Shipping: $5.00 (ePacket/Standard)
- ✅ Marketing/Fees: 20% (Facebook Ads + Shopify Fees)
- ✅ Selling Price: $60.00
In this scenario, your Net Profit is $23.00, resulting in a 38.33% Profit Margin. This is generally considered a healthy margin for e-commerce, allowing room for returns and business scaling.
Markup vs. Margin: What's the Difference?
Many new entrepreneurs confuse these two terms. Markup refers to the percentage added to the cost price to reach the selling price. Margin refers to the percentage of the selling price that is profit. While markup helps you set prices, margin determines your business's actual health and bottom-line viability.
Pro Tip: Aim for a minimum margin of 20-30% after all expenses. If your margin is below 15%, a small increase in advertising costs or a few product returns could turn your business unprofitable.