Margin vs. markup — the difference that costs sellers money
Margin is profit as a share of the selling price: sell at $100 with $60 cost and your margin is 40%. Markup is profit as a share of cost: the same sale is a 66.7% markup. They describe the same transaction with different denominators, and mixing them up is brutal — a seller who wants "50% margin" but applies 50% markup to a $60 cost prices at $90 and gets only a 33% margin.
The conversion: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin). Or skip the algebra — the second mode of this calculator takes your cost and target margin and returns the exact price to charge, using price = cost ÷ (1 − margin).
What's a healthy margin?
It depends on the model: grocery retail survives on 2–5% net, general e-commerce typically needs 15–30% after all fees to absorb returns and ad-cost swings, and handmade or digital products often run 50%+. Whatever your category, know the number per unit — averages hide loss-making SKUs.
Frequently asked questions
How do I calculate profit margin?
Margin = (price − cost) ÷ price × 100. Sell at $25 with $12.50 cost: margin = 50%.
How do I calculate markup?
Markup = (price − cost) ÷ cost × 100. The same $25 sale on $12.50 cost is a 100% markup.
How do I price for a target margin?
Price = cost ÷ (1 − target margin). For a 40% margin on a $12 cost: $12 ÷ 0.6 = $20. The calculator's second mode does this for you.
What is a good profit margin for e-commerce?
After all fees and costs, many healthy online businesses net 15–30% per order; below 10%, returns and ad-cost swings can erase profit.
More free seller calculators: Amazon FBA calculator, eBay calculator, Walmart calculator, Etsy calculator — or the all-in-one calculator hub.