Product Profitability Calculator
Product profitability calculation involves deducting all operational costs (purchase price, shipping, packaging, etc.) from the selling price to understand the actual profit generated from a product sale.
Key Terms
- Purchase Price (Cost): The net amount paid to acquire the product.
- Shipping Cost: The freight cost paid to deliver the product to the customer.
- Packaging and Other Expenses: Costs of consumables like boxes, tape, invoice printouts, bags, etc.
- Net Profit: The amount obtained by subtracting all costs from the selling price.
- Profit Margin: The ratio of net profit to the selling price.
Formula
Net Profit = Selling Price - (Purchase Price + Shipping + Packaging + Other Costs)
Profit Margin = (Net Profit / Selling Price) * 100
Why Does It Matter?
In e-commerce, looking only at the difference between the purchase and sale price can be misleading. Hidden expenses such as shipping and packaging can significantly reduce your profit margin, especially for low-priced products. With this calculator, you can see your "real" earnings.