Real profit is what's left after every cost of selling one unit, not just the difference between cost and price. Here's the full method, in order.
Product cost, shipping, packaging, marketplace/platform fees, payment processing, advertising, discounts, returns and tax. If a cost exists, it belongs in the calculation.
Net profit is revenue minus all costs. Margin is net profit as a percentage of the selling price. A healthy margin varies by category, but negative or single-digit margins are a warning sign.
ROI tells you how hard your money is working. Break-even price tells you the floor below which you lose money. Both should inform your pricing and ad budgets.
See what happens if you raise or lower price, or if returns or fees increase. This is where you find pricing headroom and risk.
It varies by category, but you want a margin that comfortably covers returns and ad spend with room left over. Use the calculator to test yours.