Markup and margin are not the same thing
It's a common mistake to confuse the two — and the difference has a real impact on your final price. Markup is the profit percentage calculated on top of the cost: markup = (price − cost) / cost. Profit margin is the profit percentage calculated on top of the sale price: margin = (price − cost) / price.
Why it matters
A 50% markup on a $100 cost yields a $150 price ($50 profit) — but that represents only a 33.3% margin on the sale price, not 50%. Confusing the two can lead to underpricing products relative to your intended profit margin.
Formulas
From markup: Price = Cost × (1 + markup/100).
From margin: Price = Cost / (1 − margin/100).
In both cases, the calculator shows the result in both metrics, so you can compare.
Practical example
A product costs $80. Applying a 60% markup gives a final price of $128, which equals a 37.5% margin. If instead you want to guarantee a 60% margin, the price needs to be $200, which equals a 150% markup.
Frequently asked questions
Are markup and profit margin the same thing?
No. Markup is profit divided by cost; margin is profit divided by sale price. For the same dollar amount of profit, the markup percentage is always higher than the margin percentage.
Which one should I use to price my products?
Profit margin tends to be more useful for financial planning, since it relates directly to total revenue. Markup is more common in retail as a practical pricing reference over cost.
Why is margin always lower than markup for the same case?
Because the sale price is always higher than the cost (when there's a profit), and margin divides profit by the larger number (the price), while markup divides by cost, which is smaller.
How do I convert markup to margin and vice versa?
Margin = Markup / (1 + Markup), and Markup = Margin / (1 − Margin), both as decimals. This calculator does that conversion for you automatically.