Margin or markup: what is the difference?

In short: Margin = profit ÷ selling price. Markup = profit ÷ purchase price. With a purchase price of €20 and a net sale of €30, markup is 50% and margin about 33%.

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The formulas

  • Margin in % = (selling price − cost) ÷ selling price × 100.
  • Markup in % = (selling price − cost) ÷ cost × 100.

Converting

Margin = markup ÷ (1 + markup). A markup of 100% equals a margin of 50%.

The most common mistake

Many say “margin” and mean markup. Then prices and profit do not match. Always calculate with the net price and deduct shipping, fees, advertising and returns before you talk about profit.

Frequently asked questions

What is a good margin?

It depends on the industry and ad costs. What matters is that profit remains after all costs.

Work it out with your numbers

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