How to work out profit margin
Profit margin is the share of the selling price you keep as profit:
Margin = (selling price − cost) ÷ selling price × 100
Buy something for $20.00 and sell it for $50.00, and the profit is $30.00. That is a 60.0% margin, because $30.00 is 60.0% of $50.00.
Margin after platform fees
Fees come out of the selling price, so they cut straight into your margin. Sell the same item on eBay, where fees on a $50.00 sale in most categories are $7.20, and the profit falls to $22.80. The margin drops from 60.0% to 45.6%. Put the fee in the "fees and other costs" box above to see your real margin. The eBay, Etsy and Poshmark calculators give you the exact fee.
The price you need for a target margin
To hit a margin, divide your total cost by one minus the margin:
Price = cost ÷ (1 − margin)
For a 40% margin on an item that cost $20.00, the price is $20.00 ÷ 0.6 = $33.33. The box under the result does this for you, and includes any fees you entered.
Margin and markup side by side
Markup measures profit against the cost instead of the price, so the same sale always has a bigger markup than margin.
| Markup | Margin | Price for a $10 cost |
|---|---|---|
| 10% | 9.1% | $11.00 |
| 20% | 16.7% | $12.00 |
| 25% | 20.0% | $12.50 |
| 33.3% | 25.0% | $13.33 |
| 50% | 33.3% | $15.00 |
| 75% | 42.9% | $17.50 |
| 100% | 50.0% | $20.00 |
| 150% | 60.0% | $25.00 |
| 200% | 66.7% | $30.00 |
| 300% | 75.0% | $40.00 |
Need the price from a markup instead? Use the markup calculator.
Profit margin questions
What is the difference between margin and markup?
Both describe the same profit. Margin divides the profit by the selling price. Markup divides it by the cost. An item bought for $50 and sold for $100 has a 50% margin and a 100% markup.
How do I calculate profit margin?
Subtract the cost from the selling price, divide by the selling price and multiply by 100. Selling for $80.00 something that cost $60.00 gives a 25.0% margin.
Can a profit margin be more than 100%?
No. Margin is a share of the selling price, so even an item that cost nothing has a 100% margin. Markup has no upper limit.
What markup gives a 50% margin?
A 100% markup, which means doubling the cost. Retailers call this keystone pricing.
Should I include fees and shipping in my margin?
Yes, if you want the margin you actually keep. Platform fees, shipping you pay and packaging all come out of the sale. Add them as other costs to see your margin after them.