Margin vs markup
They sound alike but measure different things, and mixing them up is one of the most common pricing mistakes.
- Profit margin is profit as a share of the price: how much of each sale you keep.
- Markup is profit as a share of the cost: how much you add on top.
Margin = (price − cost − fees) ÷ price · Markup = (price − cost) ÷ cost
If something costs $60 and you sell it for $100, the markup is 66.7% but the margin is 40%.
Margin and markup equivalents
| Margin | Markup needed |
|---|---|
| 20% | 25% |
| 25% | 33.3% |
| 33.3% | 50% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
Finding a price with fees included
When a platform takes a cut, the price has to cover the cost, the fee and your margin. With cost C, platform fee F and target margin M:
Price = C ÷ (1 − F − M)
A $60 cost with Fiverr's 20% fee and a 40% target margin needs a $150 price. Fee plus margin must stay under 100%, or no price works.
Where freelancers use this
- Reselling templates, themes or stock assets inside a service.
- Agency work where you outsource part of a project.
- Checking whether a discount still leaves you a healthy margin.
Frequently asked questions
What's the difference between margin and markup?
Margin is profit divided by price; markup is profit divided by cost. A 50% markup equals a 33.3% margin.
What is a good profit margin for freelancers?
Service businesses often aim for 30–50% margins on outsourced or resold work. For your own time, use the hourly rate calculator instead.
How do platform fees affect my margin?
They come out of the price before you profit. A 20% Fiverr fee on a $100 sale leaves $80 to cover your cost and profit.
Why does the calculator say no price works?
If the platform fee plus your target margin is 100% or more, every extra dollar of price goes to the fee and margin, leaving nothing for cost. Lower the target margin.
TakehomeKit is independent and not affiliated with Fiverr, Upwork, Payoneer, Wise or any other company mentioned. Fees, limits and tax rules change; we check them regularly, but always confirm the final number with the platform or an adviser before you rely on it.