Margin and markup both compare profit with another number, but they use different bases. Confusing them can produce a price that is lower than intended.
Margin uses revenue as the base
Profit margin is (revenue − cost) ÷ revenue × 100. If an item sells for $100 and costs $60, profit is $40 and margin is 40%.
Markup uses cost as the base
Markup is (selling price − cost) ÷ cost × 100. With the same $100 price and $60 cost, markup is $40 ÷ $60 × 100, or about 66.67%.
Convert a target margin into a price
To price for a target margin, divide cost by one minus the margin decimal. A $60 cost with a 40% target margin gives $60 ÷ 0.60 = $100.
Define which costs are included
A simple calculator may use direct cost only. Real business decisions can also involve shipping, payment fees, labor, overhead, returns, and tax. State the cost definition alongside the percentage.
A calculator is often the quickest way to check your mental math. The important part is using the right starting value.
Open a calculator →Common questions
Is a 50% markup the same as a 50% margin?
No. A 50% markup corresponds to a 33.33% margin.
Can margin exceed 100%?
A standard positive-cost profit margin normally cannot exceed 100%, while markup can.
Which one should a report use?
Use the measure your organization defines, label it clearly, and apply it consistently.
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