Ecommerce margin calculator.
Margin is what is left after everything the sale actually cost. On a marketplace that means five things, not two: goods, fees, shipping, advertising and returns. Leaving any one of them out is how a business with an 8% margin comes to believe it has 28%.
What customers paid, excluding tax you collect and pass on. Not your settlement amount — that is already net of fees.
Landed cost of everything sold in the period.
Commission or referral, closing or collection, fulfilment, storage.
Outbound you pay yourself, plus reverse logistics on returns.
Total ad spend. A cost of sale, not a separate marketing line.
Refunded value you do not recover, plus damaged or unsellable stock.
27.28%
₹62,750 kept on ₹2,30,000 of sales.
Strong — check nothing is missing
Achievable in high-margin categories, and also what the arithmetic looks like when returns or storage have been left out.
A blended margin hides its own shape — this figure across a catalogue is often one strong product carrying several that lose money on every order.
How it is worked out.
Net Margin = (Revenue − Total Costs) ÷ Revenue × 100
- Revenue
- What customers paid, excluding GST you collect and pass on. Not your settlement amount, which is already net of fees.
- Cost of goods
- Landed cost of everything you sold in the period.
- Marketplace fees
- Commission or referral, closing or collection, fulfilment and storage.
- Shipping
- Outbound logistics you pay yourself, plus reverse logistics on returns.
- Advertising
- Total ad spend for the period. It is a cost of sale, not a separate marketing line to be excused.
- Returns and write-offs
- Refunded value you do not recover, plus damaged and unsellable stock.
If you subtract fees from a settlement figure you will double-count them: settlement reports have already taken them out. Start from gross sales, or start from settlement and stop.
With real numbers.
Same seller, one month, across the catalogue.
| Revenue (ex-GST) | ₹2,30,000 |
|---|---|
| Cost of goods | ₹74,000 |
| Marketplace fees | ₹50,600 |
| Shipping and logistics | ₹15,050 |
| Advertising | ₹18,400 |
| Returns and write-offs | ₹9,200 |
| Total costs | ₹1,67,250 |
(2,30,000 − 1,67,250) ÷ 2,30,000 × 100 = 27.28% net margin
₹62,750 kept on ₹2,30,000 of sales. Note that advertising is 8% of revenue — the TACoS from the earlier example — so nearly a third of what was left after goods, fees and shipping went on ads.
What the number means.
Marketplace margins are thinner than most sellers expect, because the fee and logistics lines are larger than they feel when paid a few rupees at a time.
| Range | Verdict | What it means |
|---|---|---|
| Under 5% | Fragile | A fee revision, a bad returns month or a competitor's price cut takes you negative. Viable only at volume you can genuinely sustain. |
| 5% – 15% | Typical | Where a lot of marketplace businesses actually sit once advertising and returns are honestly counted. Workable, and worth protecting rather than growing recklessly. |
| 15% – 25% | Healthy | Enough room to advertise properly, absorb returns and still fund inventory. This is the band that makes growth self-financing. |
| Over 25% | Strong — check nothing is missing | Genuinely achievable in high-margin categories, and also what the arithmetic looks like when returns, storage or ad spend have been left out. Confirm before celebrating. |
A blended margin also hides its own shape. A 27% catalogue average is often one strong SKU carrying several that lose money on every order.
Where this goes wrong.
- 01
Leaving advertising out
Margin computed before ad spend is your break-even ACOS, not your margin. Both numbers are useful; calling one the other is the most expensive naming error in marketplace selling.
- 02
Treating settlement amounts as revenue and then subtracting fees
The settlement figure is already net of commission, shipping and collection charges. Subtracting them again counts them twice and can make a profitable month look like a loss.
- 03
Counting GST collected as revenue
Tax collected on behalf of the government is not yours. Including it inflates the top line and flatters margin by roughly the tax rate.
- 04
Ignoring returns and reverse logistics
A refunded order costs the outbound shipping, the return shipping and often the unit itself. In apparel and footwear this line alone can be larger than the advertising line.
- 05
Reading one blended margin for the whole catalogue
The average tells you the business is fine while individual SKUs quietly lose money on every order. Margin is only actionable per product.
The rest of the set.
Where the real numbers live.
- Amazon Settlement Calculator
Itemises the fee line for a given price and category, so the number you put in here is not a guess.
- Flipkart Settlement Calculator
The same for Flipkart: commission, fixed fee, shipping, collection and GST.
- Amazon Business Report (By ASIN)
Revenue and units per ASIN from your own export — the top line of this calculation, split by product rather than blended.
A blended margin is an average of things that disagree.
27% across the catalogue can be one hero SKU carrying a dozen loss-makers, and the average will never say so. The Business Report module breaks revenue and units down by ASIN from the export you already have.
Questions people actually ask.
What is a good net margin for a marketplace seller?
Once fees, shipping, advertising and returns are all counted, a lot of marketplace businesses sit between 5% and 15%. Above 15% is healthy and above 25% is strong — but a figure over 25% is also what the arithmetic produces when a cost line has been forgotten, so it is worth a second look before it becomes a plan.
What is the difference between gross and net margin?
Gross margin subtracts only the cost of goods. Net margin subtracts everything that varies with the sale — marketplace fees, shipping, advertising, returns. On a marketplace the gap between the two is enormous, often twenty points or more, which is why gross margin is close to useless for deciding what to spend on ads.
Should GST be part of the margin calculation?
GST you collect from customers should be excluded from revenue — it is never yours. GST charged on marketplace fees is a real cost only if you cannot reclaim it as input credit. A registered seller should use fees net of tax; an unregistered one pays the gross amount.
Why is my margin lower than my settlement report suggests?
Settlement is net of marketplace fees but not of your product cost, your advertising, your inbound freight or unrecovered returns. It answers what the marketplace owes you, not what you earned. The gap between the two is usually advertising and returns.
How do I improve margin without raising prices?
In rough order of how much they usually move: cut wasted ad spend, which is the fastest and needs no supplier conversation; reduce returns by fixing the listings that cause them; move to a fee-efficient fulfilment mode or size band; and renegotiate landed cost. Wasted ad spend is first because it is the only one visible in a report you can download this afternoon.