FINANCIAL MATH
Find profit, margin, and markup from a cost and selling price. Enter both.
Margin
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Profit over price.Usage Tip
A common mix-up: a 50 percent margin is a 100 percent markup. Always check which base is meant.
THE MATH
margin = profit ÷ price; markup = profit ÷ cost
profit = price − cost
profit = price − cost
Margin and markup both describe profit, but against different bases: margin is profit over selling price, markup is profit over cost.
The same sale gives a higher markup percentage than margin percentage.
The same sale gives a higher markup percentage than margin percentage.
Both cost and selling price must be positive.
Margin is always less than the matching markup.
Profit is simply price minus cost.
Margin is always less than the matching markup.
Profit is simply price minus cost.
Practical Notes
Markup and margin both describe profit, but against different bases. Markup is profit divided by cost, while margin is profit divided by the selling price. The same sale therefore gives two different percentages: an item bought for 100 and sold for 150 has a 50 percent markup but a margin of about 33 percent.
Margin is always smaller than markup for the same price, which is why confusing them is a common pricing mistake. To reach a target margin, you need a larger markup than the margin figure suggests, so decide which measure your pricing is based on before setting a price.
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