Markup vs. Margin Calculator
Enter a cost and selling price to calculate both markup percentage (profit over cost) and margin percentage (profit over selling price), the two commonly confused pricing metrics.
Markup and margin are both about the same $20 of profit, but expressed as a percentage of two different numbers, cost for markup, selling price for margin, which is exactly why they're never the same figure and why mixing them up is such a common, expensive pricing mistake. A 50% markup ($40 cost, $60 price) is only a 33% margin, not 50%, because the margin is measured against the higher selling price, not the lower cost.
Frequently asked questions
Why are markup and margin different numbers for the same sale?+
They're both measuring the same dollar amount of profit, but against two different bases: markup divides profit by cost, margin divides profit by selling price. Since selling price is always higher than cost (when there's a profit), margin is always a smaller percentage than markup for the same sale.
Which one should I actually use when pricing something?+
Margin is generally more useful for understanding overall profitability (it directly answers "what percentage of revenue is profit"), while markup is more common as a pricing method ("add 50% to cost"). Knowing both, and not confusing them, matters more than picking one.
What's the actual mistake people make confusing the two?+
Assuming a 50% markup and a 50% margin are the same thing and pricing accordingly. A 50% markup on a $40 cost item only produces a 33% margin, not 50%, which can meaningfully undershoot a target profitability if the two get swapped.