The formula
Profit margin = (price − all costs) ÷ price × 100
"All costs" means materials, packaging, shipping you pay for, marketplace and payment fees — and ideally your time.
Example for an online seller
| Item | Amount |
|---|---|
| Selling price | $30.00 |
| Materials & packaging | −$12.00 |
| Fees (9.5% + $0.45) | −$3.30 |
| Profit | $14.70 |
| Profit margin | 49% |
Check your own products with the profit margin calculator — it also finds the price for any target margin.
Margin vs markup
| Cost | Price | Markup | Margin |
|---|---|---|---|
| $10 | $15 | 50% | 33% |
| $10 | $20 | 100% | 50% |
| $10 | $30 | 200% | 67% |
From margin to your paycheck
Profit isn't take-home pay: self-employment tax and income tax come out of it. Our guide on how to pay yourself as a small business owner turns margin into a steady owner's pay.
Frequently asked questions
What is a good profit margin?
It depends on the industry. Many small product sellers aim for 30% to 50% or more after all fees, because profit also has to cover time, overheads, taxes and slow months.
Is markup the same as margin?
No. Markup compares profit to cost; margin compares profit to price. A $10 item sold for $20 has a 100% markup but a 50% margin.
Should I include fees in my margin?
Yes. Marketplace, payment and listing fees are real costs. Leaving them out makes your margin look better than it is.
Written by
Finance Specialist & Editor, VaultlyApps
Researched against primary US sources and reviewed by a finance expert on our team. Written for US readers — general education, not financial, tax or legal advice. Editorial policy · Disclaimer
