Profit Margin vs Markup: What Is the Difference?
Learn how margin and markup differ and which to use when pricing products.
Margin and markup both measure profit, but from different bases. Confusing them leads to underpricing or unrealistic revenue projections.
The formulas
- Profit = Selling price − Cost
- Margin % = Profit ÷ Selling price × 100
- Markup % = Profit ÷ Cost × 100
- Example: Cost $60, Price $100 → 40% margin, 66.7% markup