Markup vs Margin — Business Pricing Formulas
Markup and margin are often confused but they're calculated differently. Markup is based on cost; margin is based on selling price.
Markup and Margin Formulas
Markup = (Price - Cost) / Cost × 100 | Margin = (Price - Cost) / Price × 100
Where:
- Price = Selling price
- Cost = Cost of goods/purchase price
Step-by-Step:
- 1
Find the difference
Selling Price - Cost = Gross Profit.
- 2
For Markup
Divide by Cost and multiply by 100.
- 3
For Margin
Divide by Selling Price and multiply by 100.
Worked Examples:
Product pricing
Cost: ₹200Selling Price: ₹300
Result: Markup: 50%, Margin: 33.3%
Markup: (300-200)/200 × 100 = 50%. Margin: (300-200)/300 × 100 = 33.3%