- What's the difference between markup and margin?
- Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. A 40% margin means $0.40 of every dollar of revenue is profit. To achieve the same result using markup, you'd need a 66.7% markup (profit ÷ cost × 100). Margin is the standard in retail and Etsy pricing guides because it scales correctly as prices change — this calculator uses margin on price.
- What should I include in the overhead percentage?
- Overhead covers any cost not tied to a single item: Etsy/platform listing fees (typically 6.5% transaction + 3% payment), shipping materials, tools that wear out, studio rent, electricity, software subscriptions, and photography for listings. A common starting point for small handmade sellers is 15–25%. If you sell primarily on Etsy, add at least 10% to cover platform fees before layering in other overhead.
- How do I decide what margin to target?
- Most profitable handmade sellers target 30–50% margin on standard items, and 50–60%+ on premium or custom work. If you wholesale to boutiques, they typically expect to double your price (keystone pricing), so you need at least 50% margin to leave room for their markup. Start with 40% as a baseline and adjust based on how your prices compare in the market and whether items sell well at that level.