What is the Difference Between Markup and Margin?

Many business owners confuse these two terms, which can lead to pricing mistakes. While both relate to profit, they look at it from different angles:

• Margin is the percentage of your selling price that is profit. (Profit / Selling Price)
• Markup is the percentage you added to your cost to get the selling price. (Profit / Cost)

Example: If a product costs you $50 and you sell it for $100, your profit is $50. Your Markup is 100% (you doubled the cost), but your Profit Margin is 50% (half of the revenue is profit). Use this calculator to ensure you are pricing your items correctly!