Markup vs Margin Calculator
Understand the difference between markup and margin. Many confuse these - see the side-by-side comparison.
The cost of your product
From Markup
Selling Price:
$0.00
Actual Margin:
0.00%
From Margin
Selling Price:
$0.00
Equivalent Markup:
0.00%
Why 50% markup ≠ 50% margin:
Markup is profit over cost: (Price - Cost) / Cost × 100
Margin is profit over price: (Price - Cost) / Price × 100
Example: $100 cost with 50% markup = $150 price = 33.33% margin
Understanding Markup vs Margin
Many business owners confuse markup and margin, but understanding the difference is critical for proper pricing and profitability analysis.
The Key Difference
- Markup: Calculated as a percentage of your cost. It answers "How much am I adding to my cost?"
- Margin: Calculated as a percentage of your selling price. It answers "What percentage of my sale is profit?"
Why This Matters
Using markup when you mean margin (or vice versa) can lead to serious pricing errors:
- A 50% markup only gives you a 33% margin
- To achieve a 50% margin, you need a 100% markup
- The gap between markup and margin increases as percentages go up
Real-World Example
Scenario: You buy a product for $100 and want to know your pricing options.
- With 50% Markup: Sell for $150, profit $50, margin is 33.33%
- With 50% Margin: Sell for $200, profit $100, markup is 100%
Which Should You Use?
- Markup: Simpler for quick pricing (add percentage to cost)
- Margin: Better for financial analysis and comparing profitability
- Best Practice: Understand both and be consistent in your communication