Markup vs Margin
Markup and margin both describe profit, but they compare profit to different numbers.
Markup formula
Markup = Profit / Cost * 100Markup is useful when you start with cost and need to set a selling price.
Margin formula
Margin = Profit / Selling Price * 100Margin is useful when you want to understand how much of each sales dollar becomes profit.
Example
If a product costs $100 and you add a 50% markup, the selling price is $150. Profit is $50.
The markup is 50% because $50 profit divided by $100 cost equals 50%. The margin is 33.33% because $50 profit divided by $150 selling price equals 33.33%.
How to use both
Use the Markup Calculator to set a price from cost. Then use the Profit Margin Calculator to check whether the resulting margin is strong enough.
FAQ
What is the main difference between markup and margin?
Markup divides profit by cost. Margin divides profit by selling price or revenue.
Why is 50% markup not 50% margin?
If cost is $100 and markup is 50%, selling price is $150. Profit is $50, so margin is $50 divided by $150, or 33.33%.
Which should I use for pricing?
Use markup to set prices from cost, then check margin to see whether the price leaves enough profit.