Markup vs Margin: Same Profit, Different Percent

Markup and margin describe the same profit dollars with different denominators. Markup divides by cost. Margin divides by selling price. Confusing them is the most common pricing mistake we see on small-shop floors — not because the math is hard, but because people reuse the word “percent” for both.

Same deal, two answers

Cost \$40, price \$70. Profit = \$30. Markup = \$30 ÷ \$40 = 75%. Margin = \$30 ÷ \$70 ≈ 42.9%. Write both on the quote if buyers and sellers use different vocabularies.

Converting without a spreadsheet

Margin = markup ÷ (100 + markup) × 100. Markup = margin ÷ (100 − margin) × 100. Example: 50% markup → 50 ÷ 150 = 33.3% margin. Target 40% margin → 40 ÷ 60 = 66.7% markup. The margin vs markup calculator does the swap in one field.

Who says which word

Wholesale and many product buyers still speak markup (“2.5× cost”). Finance decks, investors, and grocery-style food cost talks lean margin. If a wholesale sheet says “40%,” ask which — do not assume.

Pricing from a target

From markup: price = cost × (1 + markup/100). From margin: price = cost ÷ (1 − margin/100). For \$25 cost and a 35% margin target: \$25 ÷ 0.65 ≈ \$38.46. A 35% markup on the same cost would only land at \$33.75 — different business.

Fees change the story after the sticker

Unit markup/margin on sticker price ignore marketplace take rates. After Etsy or card fees, your kept dollars shrink even if the sticker math looked fine. Run the fee calculator for the channel, then recompute margin on what you actually keep if you need that honesty check.

What this skips

Tax accounting definitions of gross margin for financial statements. Here we mean shop-floor unit math: one cost, one price. Not accounting advice.