What is the difference between profit margin and markup on a handmade product?
Last updated October 1, 2026
Profit margin is your profit divided by your price. Markup is your profit divided by your cost. They describe the same sale from two directions, so the numbers differ: an item that costs $10 and sells for $20 has a 50% margin and a 100% markup.
What are the formulas?
Profit = price - cost to make
Margin = profit / price
Markup = profit / cost to make
To convert between them: margin = markup / (1 + markup), and markup = margin / (1 - margin), using decimals (50% is 0.5).
How do margin and markup compare for the same item?
| Cost to make | Profit | Margin | Markup |
|---|---|---|---|
| $6.00 | $14.00 | 70% | 233.3% |
| $10.00 | $10.00 | 50% | 100% |
| $12.00 | $8.00 | 40% | 66.7% |
| $15.00 | $5.00 | 25% | 33.3% |
This is an illustrative example, not data from a real shop.
Which one does MakerKit show?
MakerKit shows margin, measured two slightly different ways:
- The free calculator shows margin over your sell price: (price - cost to make) / price. It has no platform fee.
- Inside the app, a recipe shows margin over your take-home, which is the listing price minus the platform fee you enter: (take-home - cost to make) / take-home.
Why can the two margins differ?
Take the $10 item selling for $20. The free calculator shows a 50% margin. In the app, with a 9.5% platform fee, the fee is $1.90 and take-home is $18.10, so the margin is ($18.10 - $10) / $18.10, about 44.8%, shown rounded as 45%.
This is an illustrative example, not data from a real shop.
Doing this in MakerKit
- The free calculator shows cost, profit and margin over the sell price for one product, with no account.
- In the app, each recipe shows your cost to make, take-home after the platform fee you enter, and margin over take-home.
- MakerKit does not show markup and does not suggest a price.