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Margin vs True Margin explained

The difference between the Margin and True Margin metrics, with a worked example.

Written by David Farrington

Ouiteo shows two profitability figures — Margin and True Margin. They differ in which price they measure against.

Margin

Margin is calculated against the product's full (original) price — the higher of its price and its compare-at price. It answers: "at full price, what percentage is profit?"

Margin = (full price − cost) ÷ full price × 100

True Margin

True Margin is calculated against the actual current selling price, after any discount. It answers: "at the price I'm selling for right now, what percentage is profit?"

True Margin = (current price − cost) ÷ current price × 100

A worked example

A product has a compare-at price of $100, is currently selling for $80, and costs you $40:

  • Margin = (100 − 40) / 100 = 60% — the margin if sold at full price.

  • True Margin = (80 − 40) / 80 = 50% — the margin you actually earn on the sale.

Use Margin to compare products at their full price (ignoring temporary discounts), and True Margin to see real profitability while items are on sale.

Requirement

Both figures need a cost per item set on your products in Shopify. Without a cost, Margin and True Margin can't be calculated and will be blank.

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