Profit margin calculator
Margin and markup are not the same number, and confusing them is what makes a shop look profitable on a spreadsheet while the bank account disagrees.
Enter your cost and your price to see the margin, the markup and the profit per unit. Then set a target margin to get the price you actually need to charge.
The formulas
Profit = price - cost. Margin = profit / price. Markup = profit / cost. To get a price from a target margin: price = cost / (1 - margin).
A $12 item sold at $34 gives $22 profit, a 64.7% margin and a 183% markup. If you instead need a 45% margin, the price is 12 / (1 - 0.45) = $21.82, which is $4.18 cheaper than the current price. Both numbers are useful: margin tells you how much of the price you keep, markup tells you how hard the price is working against your cost.
Where margin quietly disappears
- Marketplace commission. A 13-20% platform fee turns a 60% gross margin into a 40% net margin.
- Discount codes. A 15% discount on a 40% margin product removes more than a third of your profit.
- Returns. The item comes back, the shipping does not.
Profit margin FAQ
What is the difference between margin and markup?
Margin is profit divided by selling price. Markup is profit divided by cost. A product that costs $10 and sells for $20 has a 50% margin and a 100% markup. Mixing them up is the most common pricing error in small retail.
What is a good profit margin?
For resale, 40-60% margin is common on marketplaces because platform fees take a large bite. For handmade goods, 50% or more is normal. Below 20% there is very little room for returns, discounting or a rise in ad costs.
Should I use margin or markup to set prices?
Set prices from the margin you need, then check the markup to see how it looks to a customer comparing against retail prices. If the markup feels aggressive, your costs are the problem, not the formula.
Does this include marketplace fees?
Not by default. This page works on gross margin. To include commission, payment processing and shipping, use the marketplace calculators or the comparison tool.