What is the difference between markup and margin?

Markup measures your profit against what the item cost you, and margin measures the same profit against what you sold it for. A $10 item sold for $20 carries a 100% markup and a 50% margin — identical money, two different percentages. Markup has no upper limit, while margin can never reach 100%, which is the quickest way to tell which one someone is quoting at you.

How do I work out a price from a target margin?

Divide the cost by one minus the margin written as a decimal. For a 40% margin on an item costing $12, that is $12 divided by 0.60, which is $20. Adding 40% to the cost instead gives $16.80 and a margin of only 29%, which is the mistake this whole guide exists to prevent.

What is a good profit margin for handmade products?

Retail handmade work priced at the common four times cost gives a 75% gross margin before fees, and half of that at wholesale. Once a marketplace has taken its cut you would typically want to still be above 50% on retail sales. Anything under about 30% leaves no room to absorb a fee change, a discount, or a supplier putting their prices up.

Does a 50% markup mean I have doubled my money?

No. A 50% markup means multiplying the cost by 1.5, so a $10 item sells for $15 and your profit is $5, a 33% margin. Doubling your money is a 100% markup and a 50% margin. This particular confusion costs makers more than any other, because 50% sounds like half either way round.

How much does a discount really cost me?

Far more than the discount percentage suggests, because it comes entirely out of your profit rather than out of your costs. Twenty percent off an item at a 67% margin cuts your profit by roughly 30%; the same discount on a 33% margin item cuts it by 60%. Always work a sale out in profit terms before you announce it.

Should I use markup or margin to compare selling channels?

Margin, every time. Channel fees are charged as a share of the selling price, which is what margin measures, so the comparison is direct: a 9.5% marketplace fee takes 9.5 percentage points off your margin on that channel. Comparing in markup terms means converting twice and getting it wrong once.

Markup and margin are not the same thing

Two words that sound interchangeable, describe the same money, and produce different prices. Mixing them up is the most common arithmetic mistake in handmade pricing, and it always errs in the same direction: you charge less than you meant to.

Updated August 31, 2026

Two ways of describing the same gap

Between what an item costs you and what you sell it for there is a gap. Markup and margin both describe that gap. The only difference is what they measure it against, and that is the whole of the confusion.

Markup is the gap as a share of what the item cost you. Add $10 to a $10 item and that is a 100% markup.
Margin is the gap as a share of what you sold it for. Sell that same $20 item and $10 of the $20 is yours, so that is a 50% margin.

Same item, same $10 of profit, and two entirely correct-sounding percentages: 100% and 50%. Neither is wrong. They answer different questions, and trouble starts the moment somebody says a bare number without saying which one they mean.

Tip. A quick sanity check: margin can never reach 100%, because the profit can never be more than the whole selling price. Markup has no ceiling. If you hear a figure above 100%, it is a markup.

Where the confusion takes your money

Say you have decided you want 30%. It is a sensible-sounding target and you have heard other sellers use it. What you almost certainly do next is take the cost and add 30% to it — and that produces a smaller number than the one you had in mind.

Wanting 30%, and the two prices it produces

What the item costs youMaterials, labour, overhead and packaging, all in	$10.00
Price with 30% added on topA 30% markup, which is what most people reach for	$13.00
Profit at that priceThree dollars out of thirteen is a 23% margin, not 30%	$3.00
Price that gives a real 30% marginThe cost divided by 0.70	$14.29
Given away per item	$1.29

A dollar twenty-nine sounds like nothing. Across four hundred items in a year it is more than five hundred dollars, earned by nobody and noticed by no one. The fix is a single change of arithmetic: to hit a margin, divide the cost by one minus the margin rather than multiplying it by one plus the number.

Watch out. The gap widens fast as the percentage climbs. Aim for a 50% margin by adding 50% and you land on a 33% margin instead, having missed by a third of your profit.

Multipliers, which dodge the argument entirely

This is why handmade pricing advice is usually given as a multiplier rather than a percentage. Nobody can misread "four times cost". It is the same instruction whichever camp you were raised in, and it is why the calculator asks for a multiplier rather than a percentage.

2x cost is a 100% markup and a 50% margin. The usual wholesale floor.
2.5x cost is a 150% markup and a 60% margin.
3x cost is a 200% markup and a 67% margin.
4x cost is a 300% markup and a 75% margin. The common handmade retail rule of thumb.

If you ever need to convert one, the arithmetic is short. A multiplier turns into a margin as one minus one divided by the multiplier, so four times cost gives one minus a quarter, which is 75%. Going the other way, a margin turns into a multiplier as one divided by one minus the margin.

Fees and discounts are margin problems

Here is the practical reason to think in margin rather than markup once your prices are set. Everything that goes on to eat your profit is charged as a share of the selling price, which is precisely what margin measures.

A marketplace fee of around 10% is not 10% off your profit — it is ten percentage points straight out of your margin. On a 4x item at 75% margin you are left with 65% and barely notice. On a thin 25% margin item you are left with 15%, and you have lost nearly half your profit to the same fee.

Discounts behave the same way and are far more brutal than they look. Take 20% off a 67% margin item and your profit falls by about 30%. Take the same 20% off a 33% margin item and your profit falls by 60%. The identical sale sign does entirely different damage depending on where you started.

Watch out. Before you run a sale, work out what the discount does to profit rather than to price. A 25% off weekend on thin margins can sell more than you have ever sold and still make less than an ordinary week.

Which one to use, and when

You do not have to pick a side. They are useful at different moments, and knowing which moment you are in is most of the skill.

Use a multiplier when you are setting a price from a cost. It is unambiguous and it is how wholesale and retail conventions are written.
Use margin when you are judging a price that already exists, comparing channels, or working out what a fee or a discount really costs you.
Use markup when you are talking to a supplier or reading trade advice, since that world tends to speak in markup.
Whenever someone quotes a bare percentage at you, ask which one they mean before you use it. Most people do not know, and the answer changes your price.

The calculator does this in the background: you give it a multiplier, and it shows the profit and the margin that come out the other side once fees are taken. That way the number you set is the unambiguous one and the number you judge by is the one that accounts for everything.

Questions makers ask

What is the difference between markup and margin?: Markup measures your profit against what the item cost you, and margin measures the same profit against what you sold it for. A $10 item sold for $20 carries a 100% markup and a 50% margin — identical money, two different percentages. Markup has no upper limit, while margin can never reach 100%, which is the quickest way to tell which one someone is quoting at you.
How do I work out a price from a target margin?: Divide the cost by one minus the margin written as a decimal. For a 40% margin on an item costing $12, that is $12 divided by 0.60, which is $20. Adding 40% to the cost instead gives $16.80 and a margin of only 29%, which is the mistake this whole guide exists to prevent.
What is a good profit margin for handmade products?: Retail handmade work priced at the common four times cost gives a 75% gross margin before fees, and half of that at wholesale. Once a marketplace has taken its cut you would typically want to still be above 50% on retail sales. Anything under about 30% leaves no room to absorb a fee change, a discount, or a supplier putting their prices up.
Does a 50% markup mean I have doubled my money?: No. A 50% markup means multiplying the cost by 1.5, so a $10 item sells for $15 and your profit is $5, a 33% margin. Doubling your money is a 100% markup and a 50% margin. This particular confusion costs makers more than any other, because 50% sounds like half either way round.
How much does a discount really cost me?: Far more than the discount percentage suggests, because it comes entirely out of your profit rather than out of your costs. Twenty percent off an item at a 67% margin cuts your profit by roughly 30%; the same discount on a 33% margin item cuts it by 60%. Always work a sale out in profit terms before you announce it.
Should I use markup or margin to compare selling channels?: Margin, every time. Channel fees are charged as a share of the selling price, which is what margin measures, so the comparison is direct: a 9.5% marketplace fee takes 9.5 percentage points off your margin on that channel. Comparing in markup terms means converting twice and getting it wrong once.

← All guides