Margin vs markup
Both compare profit with something, but not the same thing.
- Margin = profit ÷ selling price.
- Markup = profit ÷ cost.
A cookie costs $1 and sells for $2. Profit is $1. Margin is 50%; markup is 100%.
Quick conversion
| Margin | Equals markup | Price for $1 cost |
|---|---|---|
| 30% | 43% | $1.43 |
| 50% | 100% | $2.00 |
| 60% | 150% | $2.50 |
| 70% | 233% | $3.33 |
| 75% | 300% | $4.00 |
Why it matters
If you want a 60% margin but add 60% to cost, you price at $1.60 instead of $2.50, and your margin is only 37.5%. To price for a margin, divide cost by (1 − margin).
The free calculator shows both numbers for your own recipe.
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