What's the difference between profit margin and markup?

Margin is profit as a percentage of your selling price; markup is profit as a percentage of your cost. Markup is always the higher number.

Is margin calculated on price or cost?

On your selling price. A $16 profit on a $40 sale is a 40% margin.

What costs should I include?

Everything tied to the sale: product/material cost, platform and payment fees, shipping, ads, and packaging.

What's a good profit margin?

It depends on your product type and channel — digital products run very high, physical and POD products much lower. See our guide "What Is a Good Profit Margin?" at /guides/what-is-a-good-profit-margin.

Does this work for digital products or services?

Yes. Enter your price and whatever costs apply; for a digital download your costs may just be platform fees.

Profit Margin Calculator

Profit margin tells you what share of each sale you actually keep. It's the single most useful number for pricing any product — whether you sell on Etsy, eBay, Shopify, KDP, or at a craft fair. Tip: always calculate margin on your selling price, not your cost — that's what trips most sellers up.

Last Updated: June 2026

Reviewed for current platform fees and pricing rules.

Selling price ($)

Costs

Product / unit cost ($)

Platform & payment fees ($)

Shipping cost ($)

Other costs — ads, packaging, etc. ($)

Total cost = the sum of all four cost fields above.

Total cost

$24.00

Net profit

$16.00

Profit margin

40%

Markup

66.67%

Formula

Net profit = Selling price − Total cost · Profit margin (%) = (Net profit ÷ Selling price) × 100 · Markup (%) = (Net profit ÷ Total cost) × 100

Worked example

You sell an item for $40. Your costs are $15 product, $4 fees, $5 shipping = $24 total cost.

Net profit = 40 − 24 = $16
Profit margin = 16 ÷ 40 × 100 = 40%
Markup = 16 ÷ 24 × 100 ≈ 66.7%

Answer: $16 profit · 40% margin · 66.7% markup

How it works

Add up every cost that goes into a sale — the product itself, platform and payment fees, shipping, and any ads or packaging. Subtract that total from your selling price to get profit. Divide profit by the selling price for margin, or by total cost for markup.

Same $16 profit, two different percentages — margin is always the smaller of the two because it's measured against the (larger) selling price. Mixing them up is the most common pricing mistake online sellers make.

Common mistakes

Confusing margin with markup (they're never the same number).
Calculating margin against cost instead of selling price.
Forgetting platform and payment fees — these quietly cut margin on every sale.
For handmade sellers: not paying yourself for your time, which makes margins look healthier than they are.

FAQ

What's the difference between profit margin and markup?: Margin is profit as a percentage of your selling price; markup is profit as a percentage of your cost. Markup is always the higher number.
Is margin calculated on price or cost?: On your selling price. A $16 profit on a $40 sale is a 40% margin.
What costs should I include?: Everything tied to the sale: product/material cost, platform and payment fees, shipping, ads, and packaging.
What's a good profit margin?: It depends on your product type and channel — digital products run very high, physical and POD products much lower. See our guide "What Is a Good Profit Margin?" at /guides/what-is-a-good-profit-margin.
Does this work for digital products or services?: Yes. Enter your price and whatever costs apply; for a digital download your costs may just be platform fees.

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