💡 Pricing Strategist
Master the crucial difference between Markup and Profit Margin
87%
of businesses confuse markup vs margin
$2.3T
lost annually due to pricing mistakes
Markup Calculator
Percentage ADDED to cost
$
$
Markup Percentage
50.00%
Profit Amount
$50.00
Price Breakdown
VS
Margin Calculator
Percentage of selling price that is PROFIT
$
$
Profit Margin
33.33%
Profit Amount
$50.00
Price Breakdown
🎯 The Crucial Difference
Markup
(Selling Price – Cost) ÷ Cost
Markup is the percentage ADDED to your cost price.
It answers: “How much should I add to my cost to get my selling price?”
Example: Cost $100 + 50% Markup = Selling Price $150
Profit Margin
(Selling Price – Cost) ÷ Selling Price
Margin is the percentage of your selling price that is PROFIT.
It answers: “What percentage of my selling price is actual profit?”
Example: Selling Price $150 – Cost $100 = 33.33% Margin
Key Insight
The same dollar profit gives different percentages! A 50% markup equals a 33.33% margin. This is why many businesses underprice their products.
⚡ Common Business Scenarios
📊 Markup to Margin Conversion Table
| Markup % | Margin % | Markup % | Margin % |
|---|
Remember: As markup increases, the gap between markup and margin percentages widens significantly.