Retail Markup vs Margin Calculator

Margin = profit / selling price x 100. Markup = profit / cost x 100. They use the same profit dollar amount but divide by different bases, so they are never the same percentage (except when profit is $0). Defaults: $12 cost, $18 price gives $6 profit, a 33.33% margin, and a 50% markup on the same sale.

Cost is always smaller than price when there is a profit, and markup divides by the smaller number (cost) while margin divides by the larger number (price). Dividing the same profit by a smaller base always gives a bigger percentage.

Markup is the easier number to apply when pricing from cost ("add 50% to my cost"). Margin is the number that matters for reading a P&L, since revenue (not cost) is the denominator on an income statement.

Margin = markup / (1 + markup) and markup = margin / (1 - margin), when both are expressed as decimals. A 100% markup is always a 50% margin; a 50% markup is always a 33.3% margin.