# Profit Margin

The profit margin is the Gross Margin Percentage. This is calculated based on the sale price of the item, subtracting the cost of the item, commissions and fees - ( (revenue - costs) / revenue) * 100)

Using a bit of algebra you can figure out what the price should be if you want to end up with a certain profit margin:

SalePrice - (SalePrice * CommissionRate) - CostPrice = CostPrice * ProfitMargin

For example: The item cost is \$100 and Amazon is taking a 15% commission and you want a 25% profit margin, so you need to know the price to sell it on Amazon.

CostPrice = \$100
ProfitMargin = 25% = .25
CommissionRate = 15% = .15

We need to solve for the SalePrice:

(SalePrice - (SalePrice * .15)) - 100 = 100 * .25

(SalePrice - (SalePrice * .15)) - 100 = 25

(SalePrice - (SalePrice * .15)) - 100 = 25 + 100

(SalePrice - (SalePrice * .15)) = 125

SalePrice - 15/100 SalePrice = 125

100/100 SalePrice - 15/100 SalePrice = 125

85/100 SalePrice = 125

85 SalePrice = 125 * 100

SalePrice = 12500 / 85

SalePrice = \$147.05

You will need to add 47.05 to the cost in order to get a profit margin of 25%, considering the commission in this example.