When trying to determine how much profit you stand to make on the sale of a listing, there are two main methods for calculating profit: **Profit Margin** and **Return on Investment** (or **ROI**).

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Profit Margin

Profit margin is calculated as:**Profit** / **Revenue**

Expenses include your item's purchase costs and any fees (including FBA fees) assessed by the marketplace the item is sold on.

If you bought an item for $20, sold it for $100, and Amazon took a cut of 15% ($15), you would have a **profit** of $65 and a **profit margin** of 65%:

**Profit **is your **Revenue (**$100) - **Cost **($20) - **Fees **($15)

**Profit Margin: Profit **($65) /

**Revenue**($100) = 65%

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ROI

ROI is calculated as:**Profit** / **Cost**

Using the same example above of a $20 item sold for $100 with a 15% category fee, you would have **profit** of $65 and a **Return on Investment** of 325%

**Profit **is your **Revenue (**$100) - **Cost **($20) - **Fees **($15)

**ROI: Profit **($65) /

**Cost**($20) = 325%

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Comparing the two

One of the major differences between **profit margin** and **ROI** is that **profit margin** can never exceed 100%, while **ROI** can. There are pluses and minuses to each way of calculating profit, but one is not inherently better than the other.