Margin on the Shopify product page, margin in reports, and markup
Shopify shows margin, which is profit as a share of the price. The product page calculates it from the listed price, and reports calculate it from net sales after discounts and refunds, so the two differ. Neither is markup.
Updated
Margin · profit ÷ price
66.8%
Markup · profit ÷ cost
200.9%
Three numbers
| Number | Formula | Where |
|---|---|---|
| Product page margin | (price − cost) ÷ price | Under the price on a product |
| Report margin | (net sales − cost) ÷ net sales | Profit reports |
| Markup | (price − cost) ÷ cost | Not shown by Shopify |
The product page
When a variant has a cost per item, Shopify shows a projected profit and margin in the Price section. The margin is the listed price minus the cost, divided by the listed price. Shopify’s example: a price of $50 and a cost of $30 gives a margin of 40%.
It is a projection at full price. It knows nothing about discounts.
The reports
Profit reports use net sales, which is sales after discounts and returns and excludes taxes and shipping. Shopify’s example: a shirt priced at $20 with a cost of $10 shows 50% on the product page. Sold at $15 after a discount, it shows 33% in the report.
So a product page margin is the ceiling, and the report margin is what happened.
Markup
Markup divides the same profit by cost. The $50 product with a $30 cost has a 40% margin and a 66.7% markup.
margin = markup ÷ (1 + markup)
markup = margin ÷ (1 − margin)
If your pricing rule is “cost plus 60%”, your margin is 37.5%, not 60%. See markup for a conversion table.
What none of them include
All three use cost per item and nothing else. Fulfilment, payment fees and shipping are not in any of these figures unless you added them to the cost. The margin after those costs is a contribution margin, and Shopify does not calculate it per product.
For the throw in our examples:
| Cost counted | Margin on $68.00 | |
|---|---|---|
| Shopify, supplier price as cost | $21.40 | 68.5% |
| With packaging in the cost | $22.60 | 66.8% |
| With fulfilment and payment fees counted too | $27.42 | 59.7% |
Cogsy shows the last figure for every variant, from the costs you add on top of the unit cost.
Questions
- Does Shopify show markup?
- No. The product page shows profit and margin. To get markup, divide the profit by the cost.
- Why is no margin shown on my product page?
- Shopify shows profit and margin only when a cost per item is entered. Its help page also says they are not displayed when "Charge tax on this product" is selected.
- Which margin should I trust?
- Both are correct for what they measure. The product page tells you the margin at full price. Reports tell you the margin you actually made after discounts and refunds.
Sources
Related
Glossary
Gross marginGross margin is gross profit as a percentage of revenue. The formula, a worked example, how it differs from markup, and why a missing cost inflates it.
Glossary
MarkupMarkup is the amount added to cost to reach the price, as a percentage of cost. The formula, how to convert between markup and margin, and a conversion table.
Guide
Cost per item in Shopify: what it is and what depends on itWhat Shopify's cost per item field holds, how to set it, which reports use it, who can see it, and the four things one static field cannot do.
Glossary
Contribution marginContribution margin is the price minus every cost that varies with a sale, including fulfilment and payment fees. The formula and a worked ecommerce example.