Markup & Margin Calculator

Markup vs. Margin: What's the Difference?

Markup and margin are two of the most commonly confused concepts in business pricing. While both measure the relationship between cost and selling price, they use different bases for the calculation, leading to very different percentages for the same transaction.

Markup

Markup is the percentage added to the cost price to arrive at the selling price. The formula is:

Markup % = ((Selling Price - Cost) / Cost) × 100

For example, if a product costs $50 and you sell it for $75, the markup is (75 - 50) / 50 × 100 = 50%.

Margin

Margin (also called gross margin) is the percentage of theselling price that is profit. The formula is:

Margin % = ((Selling Price - Cost) / Selling Price) × 100

Using the same example ($50 cost, $75 sell), the margin is (75 - 50) / 75 × 100 = 33.33%.

Why This Matters

A 50% markup does not equal a 50% margin. A 50% markup results in only a 33.33% margin. If you confuse the two when setting prices, you could significantly under-price your products. Many businesses target a specific margin (e.g., 40%) but accidentally apply that number as a markup, leaving money on the table.

Quick Reference

• A 100% markup means you doubled the cost — the margin is 50%.
• A 50% margin means half the selling price is profit — the markup is 100%.
• Margin will always be a smaller number than markup for the same transaction.
• The multiplier (selling price ÷ cost) is the fastest way to apply markup: a 1.5x multiplier = 50% markup.