Formula
The fee is a percent of the sale price, rounded to the nearest cent. Profit subtracts cost, fee, and shipping:
Profit = sale price − product cost − fee − shipping
Margin is that profit divided by the sale price.
Assumptions
- The fee is a percent of the sale price only.
- Shipping is a cost you pay, not a charge added for the buyer.
- One unit is sold at the entered price.
Worked example
A $48.00 sale with $18.00 cost, a 12% fee, and $4.50 shipping leaves $19.74, a 41.13% margin.
Input definitions
- Marketplace fee
- A percent of the sale price kept by a platform or payment processor.
- Margin
- Profit as a percent of the sale price, not of the product cost.
Limitations
Returns, advertising, taxes, and payment disputes are not included. A negative result is a loss on this sale.
Questions
Is margin the same as markup?
No. Margin divides profit by the sale price. Markup would divide profit by the product cost.
Does the fee include shipping the buyer paid?
Only if that shipping is already inside the sale price. The shipping field is a cost you pay.