Net profit margin = (revenue − COGS − operating expenses) ÷ revenue × 100. So $100,000 in revenue with $55,000 of COGS and $20,000 of expenses leaves $25,000 profit, a 25% net margin. Healthy ecommerce net margins typically run 10–20%.
Margins
Gross margin
45.0%
Net margin
25.0%
Gross profit
$45,000
Net profit
$25,000
Markup on cost
81.8%
Gross margin = (revenue − COGS) ÷ revenue. Net margin also subtracts operating expenses. Net margin is the figure used to value a store. Healthy ecommerce net margins typically run 10–20%.
Gross vs. net margin
Gross margin counts only the cost of goods sold; net margin also subtracts operating expenses like marketing, fulfillment, payment fees, and software. Net margin is what’s actually left as profit, so it’s the figure buyers use to value a store, and the basis for the multiple TrustProfit shows on every listing.
Frequently asked questions
How do I calculate profit margin?+
Net profit margin = (revenue − COGS − operating expenses) ÷ revenue × 100. For example, $100,000 in revenue with $55,000 of COGS and $20,000 of expenses leaves $25,000 profit — a 25% net margin. Gross margin uses only COGS.
What is a good profit margin for ecommerce?+
Healthy ecommerce net margins typically run about 10% to 20%, on gross margins of 40% to 60%. Margins vary widely by category — high-AOV and own-brand stores run higher, while reselling and dropshipping usually run thinner.
What's the difference between gross and net margin?+
Gross margin is revenue minus the cost of goods sold, divided by revenue; net margin also subtracts operating expenses like marketing, fulfillment, and fees. Net margin is what's left as profit, so it is the figure used for valuation.
