Plain-language questions
Ask for product margin per month, customer or product in the SQL Explorer with AI. The AI writes the SQL, you see the query and run it yourself; the AI only receives metadata.
KPI · E-commerce
Product margin: formula and example.
Product margin is a product's net sales revenue minus its cost, divided by its net sales revenue, as a percentage. It is gross margin at the level of a single item or category. It shows which products carry your profit and which mainly add revenue.
Product margin formula
(Net sales revenue − cost of goods) ÷ net sales revenue × 100%
Worked example
In one quarter, Acme Groothandel sells 300 units of an item at an average net price of €40, €12,000 in total. The cost price is €26 per unit, €7,800 in total. Product margin is (€12,000 − €7,800) ÷ €12,000 × 100% = €4,200 ÷ €12,000 × 100% = 35%.
Fictitious figures for Acme Groothandel, a sample wholesaler.
How to read this KPI
A higher product margin means a product contributes more per euro of revenue. Compare margins between products in the same category and track them over time, because rising purchase prices or extra discounting can quietly erode margin. Look at margin in euros as well as the percentage: a low-margin product with high volume can earn more than a high-margin product that rarely sells.
Pitfalls with product margin
- Using the list price instead of the price actually paid after discount.
- Using an outdated purchase price rather than the cost at the time of sale.
- Confusing margin with markup, which divides profit by cost price instead of selling price.
SQL & DAX
Calculating product margin in SQL and DAX
Two examples on a fictitious data warehouse for Acme Groothandel: a PostgreSQL query and a measure for a Power BI model. Adjust table and column names to your own model.
SELECT p.sku, p.name, p.category,
SUM(ol.quantity * ol.unit_price - ol.discount_amount) AS revenue,
SUM(ol.quantity * ol.unit_cost) AS cost,
ROUND(100.0 * SUM(ol.quantity * (ol.unit_price - ol.unit_cost) - ol.discount_amount)
/ NULLIF(SUM(ol.quantity * ol.unit_price - ol.discount_amount), 0), 1) AS product_margin_pct
FROM order_lines ol
JOIN products p ON p.product_id = ol.product_id
JOIN orders o ON o.order_id = ol.order_id
WHERE o.status <> 'cancelled'
AND o.order_date >= date_trunc('year', current_date)
GROUP BY p.sku, p.name, p.category
ORDER BY product_margin_pct;Product Margin % =
VAR Revenue = SUMX(OrderLines, OrderLines[quantity] * OrderLines[unit_price] - OrderLines[discount_amount])
VAR Cost = SUMX(OrderLines, OrderLines[quantity] * OrderLines[unit_cost])
RETURN
DIVIDE(Revenue - Cost, Revenue)In ENABLE
Tracking this KPI in ENABLE
In your Power BI dashboard
Define the KPI as a measure in your Power BI model and show it in the portal, with "Last refreshed" next to it. Access profiles and optional row-level security decide who sees which figures.
Custom dashboards (pilot)
Add the KPI as a tile to a custom dashboard, compared with last year. The Dashboard Builder is a pilot and can be switched on per client.
Monthly targets
With the built-in Targets app you set a target for the KPI per month, so you see actuals and target side by side.
FAQ
Frequently asked questions
How do you calculate product margin?
Subtract the cost of goods from net sales revenue and divide the result by net sales revenue. A product sold for €50 that costs €30 has a product margin of €20 ÷ €50 = 40%. Use prices excluding VAT and after discount.
What is the difference between margin and markup?
Margin divides profit by the selling price; markup divides profit by the cost price. With a cost of €30 and a selling price of €50, margin is 40% and markup is 66.7%. Mixing them up can lead you to set prices too low.
What is the difference between product margin and gross margin?
The calculation is the same, but the level differs. Gross margin usually covers the whole business or a whole period; product margin covers one item or category. The revenue-weighted average of all product margins equals your overall gross margin.
Further reading
- KPI libraryE-commerce KPIs: formulas and examplesE-commerce KPIs cover visitors, orders, returns and margin per channel. The data comes from your web shop, marketplaces and payment provider, alongside purchasing and stock from your ERP.Read more
- ResourcesHow to build a KPI dashboard: steps and examplesA KPI dashboard is an overview of the key figures you use to steer towards your goals, such as revenue, margin, on-time delivery or absenteeism. A good KPI dashboard does not start with the software, but with the decisions it needs to support. You then choose a limited number of KPIs, define them, sketch the dashboard and only then build it.Read more
- SolutionPower BI dashboard portal: share dashboards securelyShare your Power BI dashboards securely in your own portal, with role-based access.Read more
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