How to interpret your result
Gross margin is your profit as a percentage of the selling price; markup is the same profit as a percentage of your cost price — the two numbers will always differ, and it's markup, not margin, that's larger for the same product (a 50% markup on cost is only a 33.3% margin on price).
If you're setting a price from a target margin, work from the margin percentage — pricing off a markup percentage by mistake systematically underprices your product, since markup compounds faster than margin as the percentage rises.
The monthly profit figure only accounts for cost price and selling price — it doesn't include marketplace fees, GST, shipping, or returns. For a full picture of what you'll actually take home on Amazon, Flipkart, or Meesho, run the same numbers through the Marketplace Profit Calculator.
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 — see the breakdown above for how it erodes on a typical marketplace, from referral fees down to a 5–20% net margin.
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.