Seller ProfitMargin vs markup
Two numbers that sound alike and mean different things. Mixing them up is one of the commonest pricing mistakes.
The two definitions
- Markup = profit divided by cost. It tells you how much you added on top of what you paid.
- Margin = profit divided by selling price. It tells you how much of each sale you keep.
The same profit gives a smaller margin than markup because the price is larger than the cost. Margin can never reach 100 percent, but markup can pass it, because it is measured against cost.
Markup to margin
| Markup on cost | Margin on price |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 75% | 42.9% |
| 100% | 50.0% |
| 150% | 60.0% |
| 200% | 66.7% |
Margin to markup
| Margin on price | Markup on cost |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25.0% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100.0% |
| 60% | 150.0% |
The mistake to avoid: adding 30 percent to cost and thinking you keep 30 percent. You keep 23 percent of the price, before any fees. With fees, the true margin is lower again, which is why the profit calculator exists.
Common questions
Which should I use when pricing?
Use margin to compare products and set targets, because it is a share of what the customer pays. Use markup only to turn a cost into a price quickly.
Why is a 50 percent markup not a 50 percent margin?
Markup divides profit by cost, margin divides it by price. A cost of 100 with a markup of 50 percent sells at 150. The profit is 50, which is a third of 150, so the margin is 33.3 percent.
Keep going
Fee percentages, GST rates and other figures in the examples on this site are made up to show the working. They are not the fees or rates of any marketplace or country: type the numbers from your own seller account and from the tax authority. Checked 14 November 2026.