Margin vs Markup
Same profit, two ways to express it. Here's how to tell them apart and why mixing them up is the most expensive mistake in pricing.
Bottom lineMargin = profit ÷ price. Markup = profit ÷ cost. A $20 cost sold at $30 is a 33% margin and a 50% markup — same dollar of profit, different denominators.
Side by side
| Markup % | Margin % | $10 cost → price |
|---|---|---|
| 20% | 16.7% | $12.00 |
| 33% | 24.8% | $13.30 |
| 50% | 33.3% | $15.00 |
| 75% | 42.9% | $17.50 |
| 100% | 50.0% | $20.00 |
| 150% | 60.0% | $25.00 |
| 200% | 66.7% | $30.00 |
| 300% | 75.0% | $40.00 |
The one-line difference
Margin answers "what % of what I take in is profit?" Markup answers "what % did I add on top of cost?"
When to use each
- Use margin for reporting, internal comparisons, and pricing decisions. Investors and accountants speak in margin.
- Use markup for cost-up pricing — when a supplier or distributor quotes you a cost and you need a sticker price fast.
Conversion formulas
- Markup → Margin:
margin = markup ÷ (1 + markup) - Margin → Markup:
markup = margin ÷ (1 − margin)
The $1M mistake
You think you're running a 40% margin. You discount 35% for a holiday sale. You should still net 5% — except you were thinking in markup. A 40% markup is only a 28.6% margin. After a 35% discount, you're losing money on every sale.
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Last updated: 2026-05-15 · Browse all calculators