Profit Margin Calculator
See the difference between a margin and a markup on the same cost, and price from either one deliberately.
Margin and markup are the same idea measured against different things, and confusing them is the single most common pricing error in handmade goods. A margin is a share of the selling price. A markup is a multiple of cost. This calculator takes one cost and one percentage and shows both prices side by side, along with the margin a markup actually produces and the markup a margin actually requires, so the difference is visible rather than described.
At a glance
- What you enter
- Cost per unit, Percentage, Which convention are you using, Selling fees
- What you get
- Price using the markup convention, Price using the margin convention, Price at the convention you chose, Profit at that price, Margin at the price you are using, Markup at the price you are using, Margin that a markup actually produces, Markup that a margin actually requires, Gap between the two prices, Gap as a share of the lower price, Selling fees at this price, Profit after selling fees, Margin after selling fees, Price to hold the margin after fees, Fees and margin together take the whole price, Price as a multiple of cost, Units to make 1000 of profit
- Formula shown
- Yes, every step, right below your results.
- Cost and privacy
- Free, no account needed, and nothing you type is stored.
See worked examples ↓ Read the FAQ ↓ Share this calculator ↓
Results are estimates for general information only, always verify with a professional or official source before acting on them.
How to use the Profit Margin Calculator
- 1 Enter Cost per unit, The full cost, including the materials, the labour and the overhead.
- 2 Enter Percentage (%), The figure that means a different thing in each of the two conventions below.
- 3 Enter Which convention are you using, The whole point of this tool is that these two give different prices for the same percentage.
- 4 Enter Selling fees (%), Marketplace commission and payment processing, which come off the selling price. Optional.
- 5 Press Calculate. You get Price using the markup convention, Price using the margin convention, Price at the convention you chose, Profit at that price, Margin at the price you are using, Markup at the price you are using, Margin that a markup actually produces, Markup that a margin actually requires, Gap between the two prices, Gap as a share of the lower price, Selling fees at this price, Profit after selling fees, Margin after selling fees, Price to hold the margin after fees, Fees and margin together take the whole price, Price as a multiple of cost, Units to make 1000 of profit, and every intermediate step stays visible under "How is this calculated?"
- 6 Change one number at a time to see what moves the result, that is usually the most useful thing a calculator can tell you.
Worked examples
Real numbers run through this calculator. Open any example to load it into the form above and change it.
A hundred dollars of cost at 40 percent
The comparison that gives this tool its name.
You enter
- Cost per unit
- $100.00
- Percentage
- 40%
- Which convention are you using
- 1
- Selling fees
- 0%
You get
- Price using the markup convention
- $140.00
- Price using the margin convention
- $166.67
- Price at the convention you chose
- $140.00
- Profit at that price
- $40.00
- Margin at the price you are using
- 28.6%
- Markup at the price you are using
- 40.0%
- Margin that a markup actually produces
- 28.6%
- Markup that a margin actually requires
- 66.7%
- Gap between the two prices
- $26.67
- Gap as a share of the lower price
- 19.0%
- Selling fees at this price
- $0.00
- Profit after selling fees
- $40.00
- Margin after selling fees
- 28.6%
- Price to hold the margin after fees
- $166.67
- Fees and margin together take the whole price
- 0
- Price as a multiple of cost
- 1.40
- Units to make 1000 of profit
- 25
A markup gives 140.00 and a margin gives 166.67. The same percentage, a gap of 26.67.
A 60 percent target on a 100 dollar cost
Where the gap between the two conventions becomes very large.
You enter
- Cost per unit
- $100.00
- Percentage
- 60%
- Which convention are you using
- 2
- Selling fees
- 0%
You get
- Price using the markup convention
- $160.00
- Price using the margin convention
- $250.00
- Price at the convention you chose
- $250.00
- Profit at that price
- $150.00
- Margin at the price you are using
- 60.0%
- Markup at the price you are using
- 150.0%
- Margin that a markup actually produces
- 37.5%
- Markup that a margin actually requires
- 150.0%
- Gap between the two prices
- $90.00
- Gap as a share of the lower price
- 56.3%
- Selling fees at this price
- $0.00
- Profit after selling fees
- $150.00
- Margin after selling fees
- 60.0%
- Price to hold the margin after fees
- $250.00
- Fees and margin together take the whole price
- 0
- Price as a multiple of cost
- 2.50
- Units to make 1000 of profit
- 7
A margin price of 250.00 against a markup price of 160.00, so the convention is worth 90.00 a unit.
A 45 percent margin on a fees charging platform
A 15 percent commission and a 3 percent processing charge.
You enter
- Cost per unit
- $119.90
- Percentage
- 45%
- Which convention are you using
- 2
- Selling fees
- 18%
You get
- Price using the markup convention
- $173.86
- Price using the margin convention
- $218.00
- Price at the convention you chose
- $218.00
- Profit at that price
- $98.10
- Margin at the price you are using
- 45.0%
- Markup at the price you are using
- 81.8%
- Margin that a markup actually produces
- 31.0%
- Markup that a margin actually requires
- 81.8%
- Gap between the two prices
- $44.15
- Gap as a share of the lower price
- 25.4%
- Selling fees at this price
- $39.24
- Profit after selling fees
- $58.86
- Margin after selling fees
- 27.0%
- Price to hold the margin after fees
- $324.05
- Fees and margin together take the whole price
- 0
- Price as a multiple of cost
- 1.82
- Units to make 1000 of profit
- 11
The price to hold the margin after fees rises to about 323.92, and the margin after fees falls back to 45 percent only at that price.
Guides that go with it
How to Price Handmade Products Without Undercharging
The arithmetic behind a price that pays you, why margin and markup are not the same thing, and how to tell when a product simply cannot be priced to work.
Standard Paper Sizes for Crafts and Handmade Projects
If you are pricing a paper project, the honest headline is this: most small handmade paper projects cost somewhere between a few dollars and about $30 in materials, and a bigger run of cards, journals...
How to Make Your Handmade Gifts Look Expensive
You can make a handmade gift read as "expensive" without spending much more money. What gives a gift that premium feel is rarely the raw material. It is the finish, the packaging, the small details, a...
Frequently asked questions
What is the difference between margin and markup?
A markup is a multiple of the cost, so a hundred dollars of cost at forty percent markup is a hundred and forty dollars. A margin is a share of the selling price, so a hundred dollars of cost at forty percent margin is a hundred and sixty six dollars sixty seven. Both are correct descriptions of a price, but the same percentage means different money, and the gap widens as the percentage rises.
Which should I use to price handmade goods?
Use whichever you can be consistent about, and say which it is whenever you quote it. Margin is the better measure of a business, because it tells you what share of every sale you keep and it is directly comparable with the fees and the overheads that also come off the price. Markup is the easier measure at the bench, because the cost is what you know and a multiple of it is quick to work out. This tool converts between them so the choice does not have to be a guess.
Can a margin be more than 100 percent?
No. A hundred percent margin would mean the whole selling price is profit and the cost is zero, and the formula divides by zero as the margin approaches it. Anything described as a 150 percent margin is a markup being called a margin. This is a useful test: if the percentage is over a hundred, it is a multiple of cost and not a share of the price.
Why does a 50 percent markup only give a 33 percent margin?
Because the profit is measured against a larger number. A hundred dollars of cost at fifty percent markup is a price of a hundred and fifty, and the fifty dollars of profit is a third of that price. The relationship is that margin equals markup divided by one plus markup, so a fifty percent markup gives 0.5 divided by 1.5, which is 33.3 percent. Every markup has a lower margin once the price exceeds the cost.
Do selling fees come out of the margin?
Yes, and directly. A marketplace commission and a payment processing charge are both shares of the selling price, so they reduce the margin rather than adding to the cost. A forty percent margin on a platform taking fifteen percent leaves about twenty five percent before any fixed per transaction charge. That is why a price that works on a market stall often does not work online, and this calculator shows the margin after fees next to the margin before them.
Terms used here
Short, plain-language definitions of the words this calculator uses.
Break-even point
The point at which revenue covers costs and profit is zero.
Cost of goods sold
Everything that goes into producing an item for sale: materials used, packaging, and the labour to make it, plus any fees directly tied to the sale.It deliberately excludes...
Marketplace fee
The commission an online marketplace takes from each sale, usually a percentage of the total including shipping, plus a separate payment processing fee and sometimes a fixed...
Markup
Profit expressed as a multiple of COST rather than as a share of price.
Overhead
The costs of running a business that do not belong to any one product: studio rent, utilities, insurance, software subscriptions, tools, marketing and your own time on...
Profit margin
Profit expressed as a share of the SELLING PRICE.