Start with one economic event

Choose one item or one consistent lot allocation. Write down the amounts you actually know. Keep estimates visibly separate from final recorded amounts.

Step 1: total buyer-paid revenue

Add the sale price and any shipping amount paid by the buyer. For multiple identical units, multiply by quantity.

Step 2: subtract selling costs

Subtract marketplace fees, seller-paid shipping, packaging, and other costs caused by this sale. The result is net proceeds.

Step 3: subtract COGS

COGS is the purchase cost allocated to the units sold. Net proceeds minus COGS equals net profit.

For a multi-quantity lot, use a documented allocation method. Do not assign the whole lot cost to every partial sale or forget the cost still attached to remaining inventory.

Step 4: calculate margin and inventory ROI

Profit margin = net profit ÷ gross buyer-paid revenue.

Inventory ROI = net profit ÷ COGS.

If gross revenue is zero, margin is undefined. If COGS is zero, inventory ROI is undefined. Displaying a dash is more honest than showing infinity.

Worked example

Suppose an item sells for $45. The allocated purchase cost is $20, marketplace fees are $4.50, and seller-paid shipping is $5.

• Net proceeds: $35.50

• Net profit: $15.50

• Profit margin: about 34.4%

• Inventory ROI: 77.5%

The arithmetic is simple; the quality depends on complete inputs.

Reconcile estimates after the sale

Before purchase, the calculation is a decision estimate. After sale, update it with the actual price, fees, shipping, returns, and adjustments. Preserve the history of meaningful corrections rather than rewriting an old outcome without explanation.

Use the calculator for deterministic arithmetic. For the broader decision system, read Reseller Profit & Pricing.