comparison
Markup vs margin
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. The same sale has a higher markup than margin, and confusing them leads to underpricing.
Side-by-side comparison
| Aspect | Markup | Margin |
|---|---|---|
| Formula | (Price − Cost) ÷ Cost × 100 | (Price − Cost) ÷ Price × 100 |
| Example (cost ₹600, price ₹1,000) | 66.7% | 40% |
| Used for | Setting prices from cost | Understanding profitability |
| Can exceed 100%? | Yes | No |
Which should you choose?
Use markup when
- · Setting prices from supplier costs.
- · Pricing many items quickly.
Use margin when
- · Comparing profitability across products.
- · Reporting financial performance.
the verdict
Decide which one your targets are in. A 40% margin requires a 66.7% markup — not 40%.
Frequently asked questions
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup equals a 33.3% margin.
How do I convert margin to markup?
Markup = margin ÷ (1 − margin). A 25% margin equals a 33.3% markup.
Which is better to use?
Both are useful — markup for pricing, margin for analysing profit.