Margin is profit ÷ price. Markup is profit ÷ cost. Same profit, different denominators, different percentages. Confusing them is the fastest way to underprice a product.
The math
A $10 cost item sold for $15: $5 of profit.
- Margin = 5 / 15 = 33.3% of selling price.
- Markup = 5 / 10 = 50% of cost.
Same $5 profit. Same cost. Same selling price. Two different "percentages" depending on what you divide by. Both are valid metrics; they just mean different things.
Conversion table
- 25% markup = 20% margin
- 50% markup = 33% margin
- 100% markup = 50% margin
- 200% markup = 67% margin
- 300% markup = 75% margin
Which to use when
From cost → use markup. You have a $10 item and want to mark it up 50%. Easy: price it at $15.
From target margin → use selling price math. You want a 40% margin on a $10 item: price = $10 / (1 − 0.4) = $16.67.
From two prices → compute both. If you have cost and price, you can always produce margin or markup.
Cost + selling price → margin %, profit, and equivalent markup. Get all three at once.