Margin and markup both describe the gap between what a product costs you and what you sell it for. They divide that gap by different numbers, so the same product can have a 50% margin and a 100% markup at the same time. Mixing them up is one of the most common reasons small sellers end up with lower profits than they planned.
Key takeaways
- Margin = profit ÷ selling price. It can never reach 100%.
- Markup = profit ÷ cost. It can be any size.
- To hit a target margin, divide your cost by (1 − margin), don't multiply it.
The formulas
Example
A candle costs you $10 to make and sells for $25. Gross profit is $15.
- Margin: $15 ÷ $25 = 60%
- Markup: $15 ÷ $10 = 150%
Both describe the same sale. Margin tells you how much of every dollar of revenue you keep. Markup tells you how much you added on top of cost.
Margin to markup conversion chart
| Margin | Equivalent markup | Price for a $10 cost |
|---|---|---|
| 10% | 11.1% | $11.11 |
| 15% | 17.6% | $11.76 |
| 20% | 25.0% | $12.50 |
| 25% | 33.3% | $13.33 |
| 30% | 42.9% | $14.29 |
| 40% | 66.7% | $16.67 |
| 50% | 100.0% | $20.00 |
| 60% | 150.0% | $25.00 |
| 70% | 233.3% | $33.33 |
| 75% | 300.0% | $40.00 |
| 80% | 400.0% | $50.00 |
The classic mistake
Suppose you want a 30% margin on a $10 item, so you add 30% and charge $13. Your profit is $3, which is only a 23.1% margin. The correct price is $10 ÷ (1 − 0.30) = $14.29. Across hundreds of orders, that gap is the difference between a healthy business and one that only breaks even.
Gross margin vs net margin
Gross margin only subtracts the product cost. Net margin subtracts everything per order: marketplace fees, payment processing, shipping, packaging and advertising. A product with a 60% gross margin can easily end up with a 10% net margin once those are counted. Our Shopify profit calculator shows both side by side, and the Etsy and eBay calculators show net margin after every fee.
What margin should you aim for?
- Handmade and print-on-demand: 50–70% gross margin, to leave room for marketplace fees and your time.
- Direct-to-consumer brands with paid ads: 60–75% gross margin, because ads often take 20–35% of revenue.
- Reselling and wholesale on Amazon or eBay: lower gross margins (30–45%) can work because volume is higher, but check ROI and net margin carefully.
These are common rules of thumb, not guarantees. Your own numbers depend on your costs, fees and ad spend.
Frequently asked questions
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a $10 cost gives a $15 price and a $5 profit, which is a 33.3% margin. A 50% margin needs a $20 price, which is a 100% markup.
How do I convert margin to markup?
Divide the margin by one minus the margin. For a 40% margin: 0.40 ÷ 0.60 = 0.667, so a 66.7% markup. To go the other way, divide markup by one plus the markup.