Profit margin calculator for Kenyan sellers

Gross margin only subtracts what you paid for the item (cost of goods sold). Net margin subtracts every other cost of making the sale too: packaging, delivery you pay, ads, M-PESA or card fees, and for a whole business, rent, wages and other running costs. A product can show a healthy 40% gross margin and still leave a thin net margin once delivery and ads are counted.

There is no single number because it depends on the trade. Fast-moving goods such as groceries, airtime and phones usually run on thin margins and make money on volume, while beauty, fashion, crafts and services often carry higher margins. The calculator flags a net margin below 10% as thin, because there is little room left for a slow week, a returned order or a supplier price rise. Compare your margin with your own past months and with similar sellers.

No. Margin is profit as a share of the selling price; markup is profit as a share of what you paid. The same KSh 600 profit on a KSh 900 item sold for KSh 1,500 is a 40% margin but a 66.7% markup. Use the margin vs markup calculator to convert between the two before you set a price.

Yes, whenever you pay them. Free delivery, a Business Till collection charge or a checkout fee all come out of your profit on that sale. Leaving them out makes your margin look better than it is. If the customer pays for delivery separately, leave delivery at zero.

A discount comes straight out of your profit, while your costs stay the same. In the example on this page, a 10% discount on a KSh 1,500 item cuts the price by KSh 150 but cuts net profit from KSh 412.50 to about KSh 263, so the net margin drops from 27.5% to about 19.5%. Check the margin before you run a sale.

Because small per-order costs add up. Delivery you absorb, packaging, the ad spend behind each order and payment fees can easily take 10 or more percentage points off your gross margin. The calculator shows how many points are lost between gross and net, and the breakdown bar shows which cost takes the biggest share.

Raise prices on items customers buy for quality rather than price, negotiate better supplier prices or buy in bulk, charge delivery separately or set a minimum order for free delivery, reduce discounting, and move ad spend to the products that sell best. Use the target margin field to see the price you would need to reach the margin you want.