How to Price a Product After Fees: Margin vs Markup Formulas

To hit a target margin after percentage fees, divide your costs by one minus the margin minus the fee rate. That single formula replaces guesswork.

Margin is not markup

Markup compares profit to cost. Margin compares profit to price. A $10 item sold for $20 has a 100% markup but a 50% margin.

Markup = (Price − Cost) ÷ Cost
Margin = (Price − Cost) ÷ Price

The price formula with fees

Most marketplaces and payment processors take a percentage of the sale plus a fixed amount per order. Include both:

Price = (Cost + Fixed fees) ÷ (1 − Fee % − Target margin %)

Example: product and shipping cost $12, fixed fees $0.45, percentage fees 10%, target margin 30%.

Price = (12 + 0.45) ÷ (1 − 0.10 − 0.30) = 12.45 ÷ 0.60 = $20.75

Check: fees are $2.08 + $0.45 = $2.53, profit is $20.75 − $12 − $2.53 = $6.22, and 6.22 ÷ 20.75 = 30%.

In a spreadsheet

With cost in B2, fixed fees in C2, fee rate in D2 and target margin in E2:

=(B2+C2)/(1-D2-E2)

Then round to a price that looks natural, such as $20.95 or $21.