Why does the calculator show a negative margin, and what does it mean for my product?
A negative margin means your selling price is below your cost, so every unit you sell takes money out of your pocket instead of putting it in. The calculator does not hide this: it changes the result label from Profit to Loss and shows both percentages with a minus sign.
Example: an abaya that costs 120 and sells for 99
Say you priced an abaya at 99 to match a competitor, then totalled the real cost of fabric, tailoring and packaging and found it came to 120. Enter the two figures in the Profit margin calculator and all three results are marked as a loss.
Cost 120 and selling price 99.
A loss of 21 on every piece.
Margin of -21.21%.
Markup of -17.50%.
How to read each number
- The loss of 21 is what you pay out of your own money with each order. Ten orders means 210 gone before any shipping or ads.
- The margin of -21.21% says you lose about 21 of every 100 the customer pays. Its practical use: it equals the rise on the current price that takes you back to break-even. Raising 99 by 21.21% lands at roughly 120.
- The markup of -17.50% says your price sits 17.5% below the cost itself. In effect you are selling at a 17.5% discount on what you paid.
The two negative figures differ for the same reason margin and markup differ when you make money: one divides by the price, the other by the cost.
Can margin go below -100%?
Yes, unlike a positive margin. With a cost of 120 and a price of 50, the loss is 70 and the margin is -140%, because the loss is bigger than the price itself. Markup cannot fall below -100%; here it is -58.33%. A margin below -100% is a loud signal that the price does not cover even half the cost, and it usually comes from a typing error or a product priced before its cost was known.
What to do once you see the loss
- Check the inputs first: is the cost for a single unit, and is the price before tax?
- Try the break-even price: type 120 as the price and the calculator tells you price equals cost, with no profit and no loss.
- Decide whether the loss is deliberate, to pull in customers, or a pricing mistake. If it is a mistake, raise the price or cut the cost.
- To find a price that leaves a profit after commissions and shipping, use the Selling-price calculator.
If you also carry fixed monthly costs such as rent, remember that breaking even on one unit is not breaking even as a business. Work out how many units cover those costs with the Break-even calculator.
Common questions
Can I type a negative cost or price?
No, both fields accept zero or more. A loss comes from the price being below the cost, not from entering a negative number.
How do I know the amount shown is a loss and not a profit?
The row label switches from Profit to Loss and the amount carries a minus sign, so you cannot mistake money lost for money earned.