Profit margin vs. markup
You buy or make an item for $20 and sell it for $30. You have added $10 to the cost. That is a 50% markup, but only a 33.3% gross margin before other expenses.
Two different denominators
Markup divides profit by cost. Margin divides profit by revenue. When the denominator changes, the percentage changes too.
Margin = (price − cost) ÷ price × 100
What happens after fees?
Suppose that $30 sale also has $3 in marketplace fees and $4 in shipping expenses that were not included in the $20 cost. The $10 spread falls to $3 in contribution profit. Your contribution margin is now 10%, even though your initial product markup was 50%.
This is why the toolkit calculates margin after all entered per-order costs and seller fees. It shows monthly profit separately, after the fixed overhead you enter.
Choose a margin you can sustain
There is no universal best margin. A handmade item with significant labor has different economics from a digital download or a print-on-demand product. Include labor, packaging, and customer acquisition before deciding what looks healthy.
Use the target-price calculator to find a candidate price, then compare it with what buyers will pay. A mathematically profitable price is only useful if the product can sell at that price.
Find your target price ↗