Markup vs Margin: How to Calculate Your Selling Price

Markup vs Margin: The Confusion That Costs Money

Markup and margin both describe profit, but from different bases — and that difference trips up pricing all the time.

• Markup is profit as a percentage of cost.
• Margin is profit as a percentage of price.

A 50% markup is only a 33% margin. Price a product thinking the two are equal and you will quietly earn less than you planned.

The Formulas

Markup % = (Price − Cost) ÷ Cost × 100

Margin % = (Price − Cost) ÷ Price × 100

Selling price from a target margin = Cost ÷ (1 − Margin %)

A Worked Example

Cost = ₹600. You want a 40% margin.

• Selling price = ₹600 ÷ (1 − 0.40) = ₹600 ÷ 0.60 = ₹1,000
• Profit = ₹400
• Markup = ₹400 ÷ ₹600 = 66.7%
• Margin = ₹400 ÷ ₹1,000 = 40%

Notice how the same ₹400 profit is a 66.7% markup but only a 40% margin.

How to Calculate the Selling Price

1. Open the free Markup Calculator.
2. Enter your cost and either your markup or your target margin.
3. Read the selling price and profit.
4. Double-check the margin with the Profit Margin Calculator.

Markup vs Margin Cheat Sheet

Markup	Equivalent Margin
25%	20%
50%	33.3%
100%	50%
200%	66.7%

Discounts Cut Margin Faster Than You Think

A 20% discount on a product with a 40% margin does not drop the margin to 20% — it drops it to about 25%. Discounts come straight off the profit.

Model the impact with the Discount Calculator, and weigh any price change against your return with the ROI Calculator.

FAQ

What is the difference between markup and margin? Markup is profit as a percentage of cost; margin is profit as a percentage of price. Margin is always lower than markup.

How do I price for a target margin? Price = Cost ÷ (1 − target margin). For a 40% margin on a ₹600 cost, that is ₹1,000.

Which should I use to price? Decide the margin you need to be profitable, then set the price from it. Use markup only when talking about cost.

Why does a discount hurt so much? It comes straight off profit. On a 40% margin, a 20% discount can cut margin by nearly half.

Price with confidence and protect your profit using the free Markup Calculator and Profit Margin Calculator.