Money & everyday · 3 min read
Markup vs Margin: The Difference, Formulas and Examples
Definitions
- Profit = price − cost
- Markup % = profit ÷ cost × 100
- Margin % = profit ÷ price × 100
Markup: profit 40 on cost 60
- 40 is 66.666667% of 60
Step-by-step working 2 steps
- 1Divide the part by the whole
40 ÷ 60 = 0.66666667
- 2Multiply by 100 to get a percent
0.66666667 × 100 = 66.666667%
Margin: profit 40 on price 100
- 40 is 40% of 100
Step-by-step working 2 steps
- 1Divide the part by the whole
40 ÷ 100 = 0.4
- 2Multiply by 100 to get a percent
0.4 × 100 = 40%
Converting between them
margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin), using decimals.
| Markup | Equivalent margin |
|---|---|
| 10% | 9.09% |
| 25% | 20% |
| 50% | 33.33% |
| 100% | 50% |
| 150% | 60% |
Setting a price
For a 30% margin on a cost of 70: price = cost ÷ (1 − 0.30) = 100. Using 30% markup instead would give 91 — a different, lower price.
Why it matters
Mixing the two up leads to under-pricing. Check percentages with the percentage calculator and discount effects.
Frequently asked questions
Can margin exceed 100%?
No — profit cannot be more than the selling price. Markup can.
Which is more common in reports?
Margin is usually reported on income statements; markup is common in retail pricing.
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