Markup vs. Margin Calculator
Understand the key difference between markup and margin for your pricing strategy.
Pricing Metrics
Markup vs. Margin: What's the Difference?
Markup and margin are two important but often confused concepts in business. Markup is the amount by which the cost of a product is increased in order to derive the selling price. Margin is the percentage of the selling price that is profit. This calculator helps you see both metrics side-by-side.
Frequently Asked Questions
Which is a better measure of profitability?
Gross margin is generally considered a better measure of profitability because it is a percentage of revenue. Markup, on the other hand, is a percentage of cost. Both are useful for different purposes.
Why is my markup percentage higher than my margin percentage?
This will always be the case (as long as there is a profit). Markup is calculated as a percentage of cost, while margin is a percentage of revenue. Since revenue is always higher than cost (for a profitable sale), the margin percentage will be lower.