Profit Margin Calculator
Discover the Profit Margin of Your Shopify Dropshipping Store
Your Profit Margin:
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What are Profit Margins?
Profit Margin (also referred to as net margin, net profit margin, or net profit ratio) is a measure of the profitability of a service, business, or a product.
It’s calculated by finding the net profit as a percentage of the revenue. The higher the percentage, the more profitable the business.
What is Revenue?
Revenue is the income that a business has from its normal activities, usually the sale of goods and services to customers.
Net Revenue vs Gross Revenue
The difference between these two numbers is very important for business owners to know. To put it simply, gross revenue is the sum of all the revenues you earn.
Net revenue is gross revenue minus the costs associated with returned goods and sales discounts. Net revenue is what is left when all the costs have been taken out.
Net Profit vs Gross Profit
Gross Profit Margin:
Gross profit margin (GPM) normally applies to a specific product or line– rather than an entire business. Calculating your GPM will help you determine pricing decisions.
A low gross profit might mean that your store needs to charge more to make selling a specific product “profitable”.
To Calculate Gross Profit Margin
Subtract the cost of goods sold (COGS) from your net sales. Divide that number into the net sales to get the ratio (which represents the percentage).