The difference between profit margin and markup
Profit margin and markup are the two concepts e-commerce sellers confuse most often, and confusing them makes your pricing misrepresent true profitability. Both measure the same profit but against a different base:
- Profit margin = profit / sale price. It takes profit as a share of the price the customer pays. It is always below %100.
- Markup = profit / cost. It takes profit as a share of what the product costs you. It can comfortably exceed %100.
A concrete example: say a product costs 100 TL and sells for 150 TL. The profit is 50 TL. From this:
| Measure | Formula | Result |
|---|---|---|
| Profit | 150 − 100 | 50 TL |
| Profit margin | 50 / 150 | %33,33 |
| Markup | 50 / 100 | %50 |
The same 50 TL profit appears as %33 as a margin but %50 as a markup. They are different numbers; talking in one and deciding with the other is a common mistake. Adding %50 to the cost does not make the margin %50 — it makes it %33,33.
Which margin is healthy?
There is no single right number; a healthy margin depends on your business model. Single-digit margins can be sustainable on high-volume, fast-moving products, while on low-volume or branded products sellers usually target a %30-50 margin. What matters is not the size of the percentage but that, once every expense is deducted, the margin stays positive and high enough to carry your cash flow.
To build a price backward from a target margin, the formula is simple: sale = cost / (1 − margin). With a %40 margin target, a product costing 100 TL has a sale price of 166,67 TL. This is different from adding a flat %40 to the cost (140 TL), and it is the correct one; the calculator's second mode does exactly this.
Margin on a marketplace: the real margin including commission and shipping
The margin between cost and sale is only the gross margin. On a marketplace like Trendyol the net margin you actually keep is far lower, because commission (VAT-included sale price × category rate), shipping/desi (volumetric unit) cost, service fee, %1 withholding tax and return costs also come off the sale price. A product with a %33 margin on paper can easily fall to a single-digit net margin, or even a loss, after these deductions.
To see your real net margin, use the Trendyol profit calculator, which breaks out every deduction per sale. And to separate the tax inside the price, take a look at the VAT calculator.