SaleMargin Lab / Guide
Profit margin vs markup for online sellers
Understand revenue, contribution profit, margin and markup before choosing a target selling price.
Two percentages, different denominators
Margin divides profit by revenue. Markup divides profit by cost. An item costing $20 and sold for $40 has 100% markup before selling expenses, but only 50% margin before those expenses. Platform fees and fulfilment reduce both figures.
Use the full order contribution
On this site, revenue includes the item and charged shipping but excludes buyer sales tax. Contribution profit subtracts modeled marketplace charges and the costs you enter. If you omit labour, returns, software, storage or overhead, the remaining number is not your final business income.
Why a target margin needs a fee model
A percentage marketplace charge rises when you raise the selling price. Dividing cost by one minus your target margin ignores that moving expense. Use the fee calculator’s price scenario and inspect the fee base, especially where buyer tax also affects a charge.
Use estimates to ask better questions
Compare a conservative selling price, actual postage and realistic advertising allocation. Keep an allowance for uncertain expenses. Validate the scenario against real completed sales before scaling stock purchases; no calculator can establish demand from costs alone.