Margin
Margin measures profit as a percentage of selling price.
Margin = (Selling price - Cost) / Selling price x 100
- Useful for reporting profitability
- Shows how much of revenue you keep
- Common in finance and management reporting
Guide
Margin vs Markup
Margin and markup are closely related, but they are not the same. Confusing them can lead to underpricing, missed targets, and messy reporting.
Markup
Markup measures profit as a percentage of cost.
Markup = (Selling price - Cost) / Cost x 100
- Useful for setting prices from cost
- Shows how much you add on top of cost
- Common in quoting and catalog pricing
Example
One product, two percentages
If an item costs $50 and sells for $75, profit is $25. The margin is 33.33% because profit is measured against price. The markup is 50% because profit is measured against cost.
Use margin when
- You report profitability
- You compare product categories
- You work from revenue targets
Use markup when
- You start from cost
- You build quotes or price lists
- You need a standard pricing rule
Next steps
Run the numbers with the calculators
Once the concept is clear, the fastest path is to test real prices and margins with the live tools.