Retail Margin Calculator

Use the Retail Margin calculator to determine your gross margin percentage based on your COGS and selling price.



To calculate the retail margin, you can follow a straightforward two-step process. This calculation involves identifying the sale price of the product and subtracting the cost of goods sold (COGS) to determine the net profit.

Here are the key steps to calculate the retail margin using a retail margin calculator:

  1. Identify the sale price (SP) of the product.
  2. Identify the cost of goods sold (COGS) for the product.
  3. Use the formula: Retail Margin = (SP – COGS) / SP x 100

For example, if the sale price is $100 and the COGS is $50:
Retail Margin = ($100 – $50) / $100 x 100 = 50%





What is the formula for calculating retail margin?

The formula for calculating retail margin is: Retail Margin (%) = [(Retail Price – Cost) / Retail Price] x 100

To calculate, subtract the cost of the item from the retail selling price, divide the result by the retail price, and multiply by 100 to get the percentage.

What factors can impact a retailer’s margin?

Several key factors can affect retail margins, including:

  • Cost of goods sold (COGS) – higher product costs reduce margin
  • Retail price – the price items are sold at impacts margin percentage
  • Sales volume – selling more can make up for lower per-item margins
  • Overhead expenses – costs like rent, labor, and marketing eat into profits
  • Markdowns/promotions – discounting lowers the effective selling price

What’s the difference between gross margin and net margin?

Gross margin only accounts for the direct costs of products sold (COGS), while net margin also factors in all other business expenses to arrive at the bottom line profit percentage. Net margin gives a fuller picture of profitability.

What is considered a good retail margin percentage?

What constitutes a “good” margin varies by retail sector and business model. In general:

  • 5% is considered a low margin
  • 10% is an average, healthy margin
  • 20% margin is seen as high and very good for most retailers
  • 50%+ margins are achieved by some luxury, high-end retailers Ultimately, margins need to be high enough for a retailer to cover expenses and turn a profit.