How to calculate profit on a sale and profit percentage without confusing cost with price

Profit on a sale is the price minus all costs for that sale: product, commission, shipping or fixed fee, tax, packaging, and listing. A R$ 100 product on Mercado Livre with a cost of R$ 40 leaves R$ 26,45. The profit percentage depends on what you divide by: 26,45% of the sale or 66,1% of the cost. Both numbers are correct, and mixing them up is behind half the confusion around pricing.

I'll show you both formulas, when to use each one, and three calculations every seller should be able to do in their head: how much a discount cuts into profit, how much more you need to sell to make up for it, and how many sales it takes to reach your target profit for the month.

#The formula for profit on a sale

Profit on a sale = price − (product + commission + shipping or fixed fee + tax + packaging + Ads)

Here's the R$ 100 example, with a 300-gram product, 12% commission on Clássico, and 6% tax:

This profit doesn't include paid listings or the store's fixed expenses. It's the contribution from that sale toward covering the rest. If your profit calculation is just "price minus cost," it shows R$ 60 when the actual amount is R$ 26,45.

#Profit percentage: based on the sale or the cost?

Both calculations are valid, and they answer different questions.

Profit as a percentage of the sale (the margin): profit ÷ price × 100. In this example, R$ 26,45 ÷ R$ 100 = 26,45%. It answers: for every real the customer pays, how much do I keep?

Profit as a percentage of cost (the return on the product): profit ÷ product cost × 100. In this example, R$ 26,45 ÷ R$ 40 = 66,1%. It answers: for every real I put into stock, how much do I get back?

When setting prices, promotions, and listings, always calculate as a percentage of the sale price, because commission, tax, and Ads are charged based on the price. To compare where to invest your stock budget, return on cost can help—as long as you also consider how long the product takes to sell.

If you sell something for R$ 100 that costs R$ 40 and say, "I make 150% profit," you’re calculating markup, not profit: (100 − 40) ÷ 40. That number ignores all fees. I explained the difference in markup: what it is and why it’s misleading.

#How much does a discount cut into your profit?

Here’s the calculation that surprises people most. A 10% discount cuts your profit by much more than 10%, because the product cost and much of the shipping cost don’t go down with the price.

On Mercado Livre, the hit is softened because at R$ 90, the shipping cost drops to a lower tier, saving R$ 2. Shopee offers no such relief: the fixed fee of R$ 4,50 stays the same.

The rule of thumb: the lower your margin, the harder a discount hits. A product with a 10% margin that gets a 5% discount loses half its profit. Before joining a promotion, don’t ask, "Will I sell more?" Ask, "How much more will I sell?" I showed how to check Mercado Livre’s promotion cost-sharing in Mercado Livre promotions.

In practice. A stationery seller asked me why her best sales month of the year had been her worst month for profit. She had put 70% of her catalog on promotion at 15% off during Children’s Day week. Sales went up 40%. Her products had an average margin of 18%; with a 15% discount, the average margin fell to around 6%. Selling 40% more with one-third the margin per unit brought in less than half the profit of a typical month.

#How many sales do you need to make R$ 10 mil a month?

Just divide. If your average profit per sale is R$ 26,45 and you want R$ 10 mil in profit:

• Before fixed expenses: R$ 10.000 ÷ R$ 26,45 = 379 sales.
• With R$ 9 mil in fixed expenses (rent, staff, software, accountant): (R$ 10.000 + R$ 9.000) ÷ R$ 26,45 = 719 sales.
• With 8% in Ads on a price of R$ 100, profit per sale drops to R$ 18,45, bringing the total to 1.030 sales.

This exercise reveals something revenue hides: paid listings can increase the number of sales you need by 40% to make the same profit. See your store’s break-even point for the full monthly calculation, including fixed expenses.

#Profit per sale, profit per product, monthly profit

These are three different numbers, each used to make a different decision:

• Profit per sale: One order. Use it to see whether that price, on that day, on that channel, paid off.
• Profit per product: Total sales of the product over a given period, minus its Ads spend. Use it to decide whether it deserves stock, advertising, or a spot in your catalog.
• Monthly profit: Total profit minus fixed expenses. Use it to see whether your business is sustainable.

I recommend working from the bottom up: first, make sure no sale loses money; then, make sure products with Ads pay for themselves; only then look at the month. If you start with the monthly total, you’ll find out about problems too late. In revenue isn’t profit, I explain why selling more can sometimes hurt your results.

#How to calculate profit without a spreadsheet

For a single sale or to test a price, the Milewa calculator does the math using Mercado Livre’s shipping table and Shopee’s fee tiers. Enter the price, cost, and weight to see your profit and margin.

For your entire store, profit needs to be calculated order by order, based on what the marketplace actually charged. Milewa imports orders from your account, applies the commission and shipping cost for each one, along with your cost, tax, and the listing’s Ads spend. It shows profit for each sale, each product, and the month, with loss-making products listed at the top.