Margin vs. markup — what's the difference?
These two terms look similar but measure profit from different angles:
| Metric | Formula | Example (Cost ₹500, Price ₹750) |
|---|---|---|
| Gross margin | Profit ÷ Selling price × 100 | ₹250 ÷ ₹750 = 33.3% |
| Markup | Profit ÷ Cost price × 100 | ₹250 ÷ ₹500 = 50% |
Margin tells you what percentage of revenue is profit — useful for financial analysis.
Markup tells you how much you added on top of cost — useful for pricing decisions.
What gross margin should e-commerce sellers target?
Gross margin is only the starting point. Here's how it erodes on a typical marketplace:
| Deduction | Typical range |
|---|---|
| Marketplace referral fee | 5–15% of selling price |
| Shipping & fulfilment | 3–8% |
| Returns & replacements | 3–15% |
| Packaging | 1–3% |
| Net margin (what's left) | 5–20% |
So if your gross margin is 30%, you might net 8–15% after all costs. To be comfortably profitable, aim for gross margin ≥ 40% before listing on a marketplace.
How to use this calculator
Mode 1 — I know my cost and price: Enter your per-unit cost and your selling price. The calculator shows gross margin, markup percentage, and monthly profit based on units sold.
Mode 2 — I want a target margin: Enter your cost and slide to your desired gross margin. The calculator computes the minimum selling price you need to hit that margin.
Does this include GST?
No — enter GST-exclusive prices (net of GST). Your selling price should be the base price before adding applicable GST. If you are GST-registered and claim ITC, use your input cost excluding GST paid.