Markup Calculator
Markup %
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Profit Margin %
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Profit Amount
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Markup vs Profit Margin — What is the Difference?
Markup and profit margin are both ways to express profit, but they use different base numbers. Markup is the percentage of the cost price: Markup % = ((Selling Price - Cost) / Cost) x 100. Profit Margin is the percentage of the selling price: Margin % = ((Selling Price - Cost) / Selling Price) x 100.
For example, if you buy a product for $50 and sell it for $80, the profit is $30. The markup is 60% (30/50), while the profit margin is 37.5% (30/80). Markup will always be higher than margin for the same product because it uses the smaller cost price as its base.
Understanding both metrics is essential for pricing strategy. Retailers often think in terms of markup when setting prices, while financial analysts prefer margin because it shows what portion of revenue is profit. Use this calculator to quickly convert between the two.
Frequently Asked Questions
What is the difference between markup and margin?
Markup is calculated as a percentage of the cost price, while margin is calculated as a percentage of the selling price. A 50% markup equals a 33.3% margin.
How do you calculate markup?
Markup % = ((Selling Price - Cost) / Cost) x 100. For example, if cost is $50 and selling price is $75, markup is ((75-50)/50) x 100 = 50%.
What is a good profit margin?
Good margins vary by industry. Grocery stores operate on 1-3% margins, retail clothing 4-13%, software companies 50-90%, and restaurants 3-9%.
Can markup be over 100%?
Yes. A 100% markup means you sell the item for double the cost. A $10 item sold at $25 has a 150% markup but only a 60% margin.