What is the difference between margin and markup?
Margin is profit as a share of the selling price; markup is the same profit as a share of the cost. The same money gives a smaller margin percentage than markup percentage.
Skip the maths and use the margin calculator
The formula
Margin % = (price − cost) ÷ price × 100. Markup % = (price − cost) ÷ cost × 100.
Step by step
- Work out the profit: selling price minus cost.
- Divide by the price for margin, or by the cost for markup.
- Multiply by 100.
- Always say which of the two you are quoting.
Worked example
Cost 60, selling price 100
- Profit = 100 − 60 = 40
- Margin = 40 ÷ 100 × 100 = 40%
- Markup = 40 ÷ 60 × 100 = 66.7%
The same 40 of profit is a 40% margin and a 66.7% markup.