🧾 Ever wonder what the difference is between markup and margin? You’re not alone. Many business owners and sellers use these terms interchangeably, but they mean two very different things.
In this guide, we’ll explain what markup and margin really are, how to calculate both, and include a free calculator you can use right away.
Table of Contents
💡 What’s the Difference Between Markup and Margin?
Let’s break it down.
- Markup is how much more you charge above your cost.
- Margin is how much of the selling price is profit.
They’re connected, but the math is different.
🏷️ Markup Formula
📈 Markup (%) = (Selling Price − Cost) ÷ Cost × 100
Example:
If your cost is $50 and you sell it for $100:
Markup = (100 − 50) ÷ 50 × 100 = 100%
So you added 100% to your cost.
📊 Margin Formula
📈 Margin (%) = (Selling Price − Cost) ÷ Selling Price × 100
Example:
If your cost is $50 and you sell it for $100:
Margin = (100 − 50) ÷ 100 × 100 = 50%
So your profit is 50% of the selling price.
✅ Key Takeaway:
- Use markup when pricing based on cost.
- Use margin when analyzing profitability.
✨ Why It Matters
Using the wrong number can hurt your business. For example, a 50% margin is not the same as a 50% markup. Confusing the two can mean undercharging your customers or overestimating your profits.
🧩 Shortcut Table
| Selling Price | Cost | Margin (%) | Markup (%) |
|---|---|---|---|
| $100 | $70 | 30% | 42.86% |
| $100 | $50 | 50% | 100% |
| $100 | $30 | 70% | 233.33% |
📎 Final Thoughts
- Margin helps you track profit.
- Markup helps you set price.
They’re two sides of the same coin, and this calculator helps you keep both in check.