Markup vs Margin Explained
Understand the difference between markup and margin, why it matters, and how to use each when pricing your products.
Markup and margin are not the same thing
This is one of the most common pricing mistakes. Markup and margin both express profit as a percentage, but they use different bases — and the difference can make or break your pricing strategy.
The key difference
| Metric | Formula | Example (£10 cost, £15 price) |
|---|---|---|
| Markup | (Profit ÷ Cost) × 100 | (£5 ÷ £10) × 100 = 50% |
| Margin | (Profit ÷ Selling Price) × 100 | (£5 ÷ £15) × 100 = 33.3% |
Same product, same profit — but very different percentages. A 50% markup is only a 33.3% margin.
Quick conversion reference
| Markup | Margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 200% | 66.7% |
When to use each
- Markup: Use when setting prices from your cost base
- Margin: Use when analysing profitability of revenue
Try the calculator
Use our Markup Calculator to convert between markup and margin, and factor in VAT, platform fees, and discounts.
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Last updated
Last reviewed: 2026-04-12T09:36:51.531Z.