Margin and markup are not the same
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. The same sale gives two different percentages, and mixing them up is one of the most common pricing mistakes.
Margin = profit ÷ price × 100
Markup = profit ÷ cost × 100
Price for a target margin = cost ÷ (1 − margin)
Example
An item costs $12 and sells for $20. Profit is $8. Margin is 8 ÷ 20 = 40%; markup is 8 ÷ 12 = 66.7%. To reach a 50% margin on the same item, the price must be 12 ÷ 0.5 = $24.
What counts as cost?
Include everything you pay per unit: materials, packaging, shipping you cover, and platform fees. If you sell on Etsy, the Etsy fee calculator shows the fee part for you.
Frequently asked questions
What is a good profit margin?
It depends on the business. Handmade and digital products often run higher margins than resold goods. What matters is that the margin covers your time, ads and the costs that are not per unit.
Can margin be more than 100%?
No. Margin is a share of the price, so it is always below 100%. Markup can be any size; a 300% markup is common for low-cost items.
How do I turn markup into margin?
Margin = markup ÷ (1 + markup). A 50% markup is a 33.3% margin.
Last reviewed: November 2026 · By Muhammad Shujah