They answer different questions
Profit margin tells you how much of your revenue remains as profit. Return on investment, or ROI, compares that profit with the cost of the product. Both are useful, but replacing one with the other can make a weak product look better than it is.
For these calculators, margin uses revenue after any selected sales VAT deduction. ROI uses the effective product cost you enter. It does not include every business asset or expense in its denominator.
A simple example
Suppose your revenue excluding sales VAT is £30. Your product costs £10 and all other costs, including marketplace fees, total £8. Your estimated profit is £12.
| Metric | Calculation | Result |
|---|---|---|
| Profit | £30 − £10 − £8 | £12 |
| Margin | £12 ÷ £30 × 100 | 40% |
| ROI on product cost | £12 ÷ £10 × 100 | 120% |
The 120% ROI does not mean you keep 120% of the sale. It means the profit is 1.2 times the product cost in this scenario.
Use margin to test pricing room
A smaller margin leaves less room for unplanned costs. Try a lower selling price, an advertising charge or a delivery surcharge. Review how much profit remains. Look at the amount in pounds as well as the percentage: a high percentage on a very low-priced item may still leave little money per order.
Use ROI to compare stock costs
If two items produce the same profit but one costs less to buy, the cheaper item has a higher product-cost ROI. That can help when comparing how much stock your budget buys. It does not measure how quickly the stock sells, the likelihood of returns or the effort needed to fulfil it.
Keep your inputs consistent
Do not compare a VAT-inclusive result with a VAT-exclusive result. Use the same cost assumptions across products. Include advertising, packaging and expected return costs wherever they matter. If product cost is zero, the tools display a dash for ROI rather than an infinite percentage.
Before deciding, compare profit in pounds, margin, product-cost ROI and how long your money will be tied up in stock.
Put the numbers to work
Try the Amazon UK FBA, eBay UK business or TikTok Shop UK calculator. Review every fee line and compare more than one selling scenario.