Markup vs Margin: The Difference (With Formulas)

Markup and margin both describe profit, but against different bases: markup is profit as a percentage of cost, while margin is profit as a percentage of the selling price. A product that costs $60 and sells for $100 has a 67% markup but a 40% margin. Confusing the two silently underprices you. Here's the difference, with a free markup calculator.

The two formulas

• Markup % = (price − cost) ÷ cost × 100 — how much you added on top of cost.
• Margin % = (price − cost) ÷ price × 100 — how much of the sale price is profit.

Same dollar profit, different denominator — which is why markup is always the larger percentage.

Why the mix-up costs money

If you want a 40% margin but set a 40% markup, you'll price too low and pocket less than planned. Decide in margin terms (what share of each sale you keep), then work back to the price. The Markup Calculator and Profit Margin Calculator let you flip between the two instantly.

Quick conversion reference

• 25% markup = 20% margin
• 50% markup = 33% margin
• 100% markup = 50% margin

Bottom line

Markup is over cost, margin is over price — set your target as a margin, then calculate the markup that achieves it. See what a good profit margin is and run the numbers free.