Margin vs markup
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. A shirt that costs $10 and sells for $15 has a 50% markup but a 33% margin. Mixing them up is one of the most common reasons shops underprice.
| Markup | Equals margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 75% | 42.9% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
Formulas
- Profit = price − cost
- Margin = (price − cost) ÷ price
- Markup = (price − cost) ÷ cost
- Price for a target margin = cost ÷ (1 − margin)
