Profit Margin vs Markup: What’s the Difference?
Margin and markup are two of the most-confused terms in pricing. They describe the same profit but measure it against different things, so the same sale can be "50% markup" and "33% margin" at once. Getting them straight protects your pricing.
The two definitions
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. Same profit in dollars — different denominator.
The formulas
markup % = (price − cost) ÷ cost × 100
margin % = (price − cost) ÷ price × 100
Example: cost 40, price 100. Profit is 60. Markup = 60 ÷ 40 = 150%. Margin = 60 ÷ 100 = 60%. The Profit Margin Calculator shows both side by side.
Why the difference matters
Because the bases differ, markup is always a larger number than margin for the same sale. If a supplier quotes "40% markup" but you plan around "40% margin", your real profit will fall short. Always confirm which one is meant.
Putting it to work
Once you know your margin, you can find how many units you must sell to cover fixed costs with the Break-Even Calculator, and measure overall returns with the ROI Calculator.
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Last updated: July 6, 2026