Margin vs Markup

The terms margin and markup both refer to profitability but are calculated differently. Margin is the percentage of the selling price that represents profit, calculated as (Selling Price – Cost) / Selling Price x 100. For example, if a product sells for 100 and costs 60, the margin is 40%.

Markup, on the other hand, is the percentage added to the cost to determine the selling price, calculated as (Selling Price – Cost) / Cost x 100. Using the same example, the markup is 66.67%. While margin focuses on sales price, markup focuses on cost, and both impact pricing and profitability strategies.