Markup vs. Margin
Same two numbers, different denominator, different answer.
Markup = profit ÷ cost. Margin = profit ÷ price. They are not the same.
Markup and margin use the same profit number but different denominators — cost for markup, selling price for margin. This makes a 50% markup only a 33% margin, and most pricing errors come from confusing them.
Part of: Saving & Spending Calculators
Quick answer
Markup = profit ÷ cost. Margin = profit ÷ price. They are not the same.
Key points
- ▸ Markup = (price − cost) ÷ cost. Denominator is COST.
- ▸ Margin = (price − cost) ÷ price. Denominator is PRICE.
- ▸ For a product that costs £10 and sells for £15: markup = 50%, margin = 33.3%.
- ▸ Markup > margin always (for positive profits).
- ▸ Retail uses margin; wholesale and trade often use markup. Know which a conversation is using.
Examples
- Cost £10, price £15Markup: (15 − 10) ÷ 10 = 50%. Margin: (15 − 10) ÷ 15 = 33.3%.
- Cost £40, price £100Markup: 60 ÷ 40 = 150%. Margin: 60 ÷ 100 = 60%.
- Target 40% marginPrice = cost ÷ (1 − 0.40) = cost ÷ 0.60. A £30 item needs £50 retail.
When to use which tool
- Markup & Margin CalculatorThe dedicated tool — enter cost and either markup % or margin %, get the other plus selling price.Convert between cost, price, markup, and margin. Shows profit, markup %, and margin % from any two inputs.
- Percentage CalculatorFor ad-hoc markup/margin checks when you already know the cost and price.Calculate percentages: what is X% of Y, X is what % of Y, and % change.
Related
- Markup & Margin CalculatorConvert between cost, price, markup, and margin. Shows profit, markup %, and margin % from any two inputs.
- Percentage CalculatorCalculate percentages: what is X% of Y, X is what % of Y, and % change.
- Break-Even CalculatorCalculate how many units you must sell to cover fixed costs — break-even quantity and revenue.
- Break-Even Analysis BasicsFixed costs, variable costs, contribution margin — in the order you actually need them.
Frequently asked questions
› Why does the same product have a 50% markup but only 33% margin? Troubleshooting
Markup uses cost (£10) as denominator: £5 profit ÷ £10 cost = 50%. Margin uses price (£15): £5 ÷ £15 = 33.3%. Same profit, different comparison basis.
› Which one should I quote to a customer?
Neither — quote the price. Markup and margin are internal business metrics. Customers only care about what they pay.
› How should I use this guide with a Kefiw tool? How-to
Use the guide as the plan and the linked Kefiw tool as the check. Read the steps first, try the move manually, then use the tool to compare outputs, catch edge cases, and decide whether the result actually fits your task.
› What mistake do tool guides help avoid? Troubleshooting
Tool guides help avoid using a utility mechanically without understanding what you are trying to accomplish. Most word, writing, and text utilities are fast, but speed can hide context mistakes. Know whether you are solving a puzzle, cleaning copy, drafting a line, or checking a rule.
› Can a tool guide help me learn the skill? How-to
A tool guide can help you learn if you pause before accepting the output and ask why it worked. Compare your first guess with the tool result, look for the rule or pattern, and repeat that review. Passive copying solves one task; active review builds the skill.