They use the same two numbers, yet they are not the same percentage — and confusing them is one of the most common (and expensive) pricing mistakes a seller or importer can make.
Both margin and markup describe the gap between what a product costs you and what you sell it for. The only difference is what you divide that profit by:
Because the selling price is always larger than the cost, markup is always a bigger percentage than margin for the same product. That one fact is where almost all of the confusion — and the lost money — comes from.
Notice that the numerator — your profit, Price − Cost — is identical. Only the denominator changes: Price for margin, Cost for markup.
A product costs you $60 and you sell it for $100, so your profit is $40. Run both numbers:
Same product, same $40 profit — "40% margin" and "66.7% markup" describe the exact same deal. They only look different because they are measured against different bases.
Here is the trap. Imagine you want a healthy 40% margin, and you think "margin and markup are basically the same, so I'll just add 40% to my cost." On a $60 item you'd price it at $84. But $84 is only a 28.6% margin (24 ÷ 84) — not 40%. You've just left roughly $16 of profit on the table on every single unit, and you won't notice until the numbers don't add up at the end of the quarter.
Keep this handy to translate between the two at a glance:
| Markup | Equivalent margin |
|---|---|
| 10% | 9.1% |
| 25% | 20.0% |
| 33% | 24.8% |
| 50% | 33.3% |
| 66.7% | 40.0% |
| 100% | 50.0% |
| 150% | 60.0% |
| 233% | 70.0% |
Most sellers actually think in margin ("I need a 40% margin to stay profitable"), so the useful move is to turn a target margin into the price you must charge:
For a $60 cost and a 40% target margin: $60 ÷ (1 − 0.40) = $60 ÷ 0.60 = $100. Again — do not simply add 40% to the cost; that path leads back to the $84 mistake above.
Use whichever your business and your partners already speak in — but always be explicit about which it is. Retail and finance usually think in margin, because it's capped below 100% and compares cleanly across products of different prices. Manufacturers, wholesalers, and many import quotes are expressed as markup on cost (the classic "keystone" pricing — doubling the cost — is a 100% markup, which is a 50% margin). When you're weighing a factory quote against your target retail margin, convert one to the other first so you're comparing like with like.
Calculate your margin & markup →CalcPricing shows both margin and markup side by side for every order quantity — and lets you fold in shipping, duty and one-time costs — so you never have to convert by hand. Enter your costs and a price and read both straight off the table.
Markup is always the bigger number for the same product, because it's measured against the smaller base (cost) rather than the larger selling price.
No. Margin is a share of the selling price, so it's always below 100%. Markup has no ceiling — a product can have a 200% or 300% markup.
Divide the markup by one plus the markup: margin = markup ÷ (1 + markup). A 100% markup becomes 100 ÷ 200 = 50% margin.
Keystone means doubling your cost — a 100% markup, which equals a 50% margin.