What is the difference between markup and margin?

Markup is the profit as a percentage of cost: (Profit/Cost)×100. Margin is the profit as a percentage of selling price: (Profit/Price)×100. Markup is always higher than margin for the same product.

How do I calculate markup?

Markup = ((Selling Price − Cost) / Cost) × 100. For example, cost $50, price $80: markup = (30/50)×100 = 60%.

How do I calculate margin?

Margin = ((Selling Price − Cost) / Selling Price) × 100. For example, cost $50, price $80: margin = (30/80)×100 = 37.5%.

Why does markup and margin matter?

Markup helps set prices based on costs. Margin shows how much of each dollar of revenue is profit, which is key for financial reporting.

Can margin exceed 100%?

No, margin is always less than 100% (it is profit divided by revenue). Markup, however, can exceed 100% when profit is greater than cost.

BUSBusiness

Markup & Margin

Calculate profit, markup percentage, and profit margin from cost and selling price. Understand the difference between markup and margin.

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Cost

Selling Price

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How It Works

Formula

\text{Profit} = \text{Price} - \text{Cost}

\text{Markup} = \frac{\text{Profit}}{\text{Cost}} \times 100\%

\text{Margin} = \frac{\text{Profit}}{\text{Price}} \times 100\%

Where

$\text{Cost}$: Your cost to acquire or produce the item
$\text{Price}$: The selling price charged to customers
$\text{Profit}$: Selling price minus cost

Profit is what is left of the selling price after covering cost. Markup expresses that profit as a percentage of cost (cost-based pricing); margin expresses it as a percentage of the selling price (revenue-based reporting). For the same product, markup is larger than margin whenever the price is above the cost (because the same profit is divided by a smaller denominator).

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