If you’ve ever sat there trying to work out what to charge for something you make, and ended up with five browser tabs open and still no number — this is why.
“How much should I charge for a handmade item?” and “what’s a good profit margin?” feel like the same question. They’re not. One is asking what to charge. The other is asking how to check your work. Most pricing advice online answers the second question and calls it the first — which is how you end up with a formula you can recite and still no idea what to type into your Etsy listing.
The confusion isn’t you. It’s markup and margin.
Search “pricing formula” and you’ll find a hundred versions of the same list: the 5 C’s of pricing, the 4 P’s, the 3 C’s. Frameworks on frameworks. What you won’t find, most of the time, is the one distinction that actually trips people up in practice: markup and margin are not the same number.
Here’s the exact difference:
- Markup = profit ÷ your cost
- Margin = profit ÷ your selling price
Same dollar amount of profit. Two different things to divide it by. And because your selling price is always bigger than your cost, margin is always the smaller percentage of the two.
A 30% markup is not a 30% margin. If you’ve been building your prices around a markup number while thinking of it as your margin, you’ve been underpricing — not because you did the maths wrong, but because you did different maths than you thought you were doing.
A worked example, with real numbers
Say a candle costs you $5.25 to make — materials, your time, a slice of the overhead. You mark it up 100% and sell it for $10.50.
- Your markup is 100% ($5.25 profit ÷ $5.25 cost)
- Your margin is 50% ($5.25 profit ÷ $10.50 price)
Both numbers describe the exact same $5.25 of profit. Neither is wrong. But if you’d been telling yourself you were taking a “50% markup,” you’d actually only be pocketing 33% margin — and you’d have no idea why the bank balance never quite matches what you thought you’d priced for.
This is the gap that quietly eats handmade and small product businesses. Not bad pricing instinct. A vocabulary mix-up that never gets corrected, because most of what’s written about pricing assumes you already know which one you’re using.
What a “good” margin actually looks like
For handmade and small-batch product sellers, a markup of 100–200% is typical — which works out to a margin of roughly 50–67%. If you’re outside that, it’s not automatically wrong: it depends on your materials, your market, and what your positioning can support. But it’s worth knowing where you actually sit, rather than guessing.
Why this isn’t something you can just “get better at” in your head
Even once you understand the difference, doing the actual calculation — materials, your labour at a fair hourly rate, your share of monthly overhead, spread across how many you realistically expect to sell, plus what you actually want to take home — is a lot to hold in your head while also running a business.
So I built a calculator that does it for you. You put in your real numbers — not a markup percentage, not a formula, just what things cost and what you want to make — and it hands you back the price to charge, with the markup and margin shown underneath so you can see exactly where you land against what’s typical.
[Get the pricing calculator →]
(delivered straight to your inbox — drop your email below and it’s yours)