Guides/Markup vs margin percentage

Markup vs margin percentage

Both describe profit relative to cost or price — but they use different bases. A 50% markup is not a 50% margin.

Formulas

• Markup % = (price − cost) ÷ cost × 100
• Margin % = (price − cost) ÷ price × 100
• From markup m (as a decimal): margin = m ÷ (1 + m). From margin g: markup = g ÷ (1 − g).

Related everyday % skills:percentage increase,percent off vs percent of.

Worked examples

1. Cost $40, sell $60: Profit $20. Markup = 20÷40 = 50%. Margin = 20÷60 ≈ 33.3%.
2. Want 25% margin: If cost is $75, price = cost ÷ (1 − 0.25) = 75÷0.75 = $100. Markup = 25÷75 ≈ 33.3%.
3. 50% markup → margin: m=0.5 → 0.5÷1.5 = 33.3% margin.
4. Discount confusion: “50% off” is a sale on price, not markup/margin language — see discount math.

Common mistakes

• Calling a 100% markup a “100% margin” (that would mean cost = 0).
• Dividing profit by the wrong base when briefing a team.
• Stacking markup percents without converting to price factors.

Check the arithmetic

Use thePercentage Calculatorfor “X% of Y,” increase/decrease, and reverse percentage checks.