These two get mixed up constantly, and the mix-up costs money. Enter a cost and a percentage to see the difference.
Compare
| Markup | Equals margin |
|---|
Same percentage, two different prices
- Markup price =
cost × (1 + markup %) - Margin price =
cost ÷ (1 − margin %) - Margin =
markup ÷ (1 + markup). Markup =margin ÷ (1 − margin)
Margin
The share of the selling price you keep as profit. A $100 sale with a 30% margin leaves you $30.
Markup
How much you add on top of cost. A 30% markup on a $100 cost makes a $130 price, which is only a 23% margin.
Break-even
The point where sales cover every bill. Below it you lose money; above it each sale adds profit.
How to use Markup vs. Margin Calculator
- Enter what the item or job costs you.
- Enter a percentage.
- Compare the markup price and the margin price for that same percentage.
- Use the conversion table to translate any markup into its true margin.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. A $100 item sold for $150 has a 50% markup but only a 33.3% margin.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup equals a 33.3% margin; a 100% markup equals a 50% margin.
Which should I use for pricing?
Either works if you use it consistently. Most owners think in margin because it tells you what share of each sale you keep.
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