What is the difference between margin and markup?
Margin is profit divided by selling price, while markup is profit divided by cost. They are related but produce different percentages.
Finance calculator
Profit Margin Calculator
Calculate gross profit, margin, markup, and selling price from cost with three practical pricing modes in one tool.
Calculate margin, markup, gross profit, and selling price from cost in one pricing calculator.
Mode
Margin vs markup
Margin is profit as a share of selling price. Markup is profit as a share of cost. They are related, but they are not the same number.
Why margin and markup get confused
Many pricing mistakes happen because margin and markup are treated like the same number. They are not. Margin tells you how much of the selling price becomes profit, while markup tells you how much profit was added relative to cost.
That means two businesses can use the same cost base and talk about pricing differently depending on whether they work in margin terms or markup terms.
Three ways to use this calculator
- Start with cost and selling price to measure your current margin and markup.
- Start with cost and target margin to work out what you need to charge.
- Start with cost and markup to convert wholesale-style pricing into an actual margin.
Why the health indicator matters
Margin strength depends on industry, but a qualitative signal still helps quickly show whether pricing is dangerously thin, broadly healthy, or exceptionally strong.
Frequently asked questions
How do I calculate selling price from a target margin?
Divide cost by one minus the target margin expressed as a decimal. That gives the selling price required to achieve the target margin.
How do I calculate selling price from markup?
Multiply cost by one plus the markup expressed as a decimal. That gives the final selling price based on markup.
Why does a 50 percent markup not mean a 50 percent margin?
Because markup is based on cost and margin is based on selling price. On a 100 cost with 50 markup, the selling price becomes 150, so the margin is only 33.3 percent.