Margin and markup answer the same question (how much do I make on this?) from different angles. Both are useful; both are widely confused. The calculator above gives you both, plus the pound-profit per unit so you can sanity-check the percentages.
Margin vs markup, definitively
Margin = profit / revenue. “Out of every $1 the customer pays, how many pence become my profit?”
Markup = profit / cost. “By what percentage did I mark up the cost to set my price?”
| Cost | Sale | Profit | Margin | Markup |
|---|---|---|---|---|
| $10 | $15 | $5 | 33% | 50% |
| $10 | $20 | $10 | 50% | 100% |
| $10 | $25 | $15 | 60% | 150% |
| $10 | $30 | $20 | 67% | 200% |
Notice that markup grows much faster than margin. A 100% markup is “only” 50% margin. Most retailers think in markup (“I marked it up 100%”); most accountants and SaaS analysts think in margin (“this product runs at 50% margin”). Both are valid; the calculator gives you both.
When margin gets misleading
Per-unit margin is the simplest view but ignores several real-world frictions:
- Platform fees — Etsy/eBay/Mercari/Depop take 5-15% of revenue before you ever see it.
- Returns — physical resale typically sees 5-15% returns; the cost of return shipping eats margin.
- Unsold stock — bought 50 items at $8 each, sold 35 at $20 = real per-sold-unit margin is much lower than per-purchased-unit.
- Labour — your own time at a notional $15-$30/hour adds to true cost.
- sales tax — if sales tax-registered, reclaims help; if not, supplier sales tax eats margin invisibly.
For real-world business margin, deduct all of these from revenue or add them to cost before running the calc.
Where to go from here
- Including platform fees: Etsy fee calculator, eBay fee calculator, Mercari profit calculator, Depop fee calculator
- Markup-first framing: Markup calculator
- Tax on profit: Side hustle tax calculator
Industry margin benchmarks for US sellers
Headline margins vary enormously by category and channel. Realistic benchmarks for the platforms PayoutMath covers:
- Mercari resale (vintage clothing): 35-55% margin typical for sourced-cheap-sold-decent items. Top sellers hit 60%+ on rare or designer pieces. Below 25% margin generally means you’re sourcing wrong or pricing wrong.
- eBay collectibles (LEGO, retro games, vinyl, Star Wars): 20-50% margin. Bigger spread than Mercari because of platform fees on business accounts and the long-tail nature of stock. Margin floor is the FVF + payment processing + your unsold-stock holding cost.
- Etsy handmade physical: 40-60% margin typical. Lower than digital because of materials cost and shipping. Plus Etsy’s ~13.5% effective fee.
- Etsy printables / digital downloads: 90-99% margin. Near-zero unit cost. The interesting metric here is volume, not margin.
- Print-on-demand (Printful etc.): 25-45% margin once you account for base cost, shipping, platform fee, and design time.
- Resale of new retail items: 10-25% margin typical. The toughest economics — competing with stockists who buy at trade prices you don’t have access to.
Below your category’s typical floor: investigate. Above the typical ceiling: you’ve found a niche or pricing edge worth defending.
Margin compression — why your margin shrinks over time
A common pattern: a seller hits 50% margin on first listings, then watches it drift toward 30% over 6-12 months. Why?
- Competition — other sellers spot your category and undercut you.
- Sourcing cost creep — your supplier raises prices, or your easy stock dries up and you’re paying more for the same items.
- Platform fee changes — Etsy raised transaction fees from 5% to 6.5% in 2022. eBay introduced FVF tiers. Both compressed seller margins by ~1.5 percentage points.
- Shipping cost increases — USPS and Evri raise rates roughly annually. If you offer free postage, this comes straight off margin.
- Promotion creep — discount codes, sale events, and platform promotions all slice into headline margin.
Defending margin requires either differentiation (something competitors can’t easily copy) or operational efficiency (lower per-unit cost via batching, automation, or supplier negotiation). For most small sellers, differentiation is the more available lever.
Margin and inventory turn — the trade-off
A faster-turning inventory tolerates lower margin. The maths:
- High margin, slow turn: 50% margin, sells once per quarter. Annual return per $100 invested = $200.
- Low margin, fast turn: 20% margin, sells once per month. Annual return per $100 invested = $240.
The low-margin-fast-turn model wins despite the lower headline margin. This is why supermarkets, Amazon, and high-volume eBay sellers can run sustainably at 5-15% margin levels that would crush a Mercari reseller — they turn stock 30+ times per year.
For small US sellers, the practical implication: chasing margin without watching turn rate misses half the picture. A 60%-margin item that sits unsold for 18 months loses to a 30%-margin item that sells within a fortnight.