What is the Difference Between Margin and Markup?

Learn the difference between Margin and Markup to help determine which settings will work best for you.

Misunderstanding the differences between Margins and Markups can lead to prices being set higher or lower than competitors, causing lost sales or profits. To avoid these types of issues, take a look at the charts below to compare the two and determine how you would like to set up your profit settings.

Margins At a Glance

Margins best represent total profits based upon revenue and sale price.

Margin Amount	Margin Percentage
Margin Amount is sale price minus the cost of goods.	Margin Percentage is margin divided by the sale price.
(Sale Price) - (Cost of Goods) = (Margin Amount)	(Margin Amount) ÷ (Sale Price) = (Margin %)
Example: If a product sells for $100 and costs $70 to manufacture, its margin is $30	Example: If a product sells for $100 and the margin is $30, its margin percentage is 30%

For more details on Margins, click here.

Markups at a Glance

Markups best represent changes in supplier pricing based upon product cost.

Markup Amount	Markup Percentage
Markup Amount is the amount added to the cost of goods to determine the sale price.	Markup Percentage is the markup amount divided by the cost of goods
(Cost of Goods) + (Markup Amount) = (Sale Price)	(Markup Amount) / (Cost of Goods) = (Markup %)
Example: If a product costs $70 and the sale price is $100, the Markup Amount is $30	Example: If a product costs $70 and is marked up by $30, the Markup Percentage is ~42.9%

For more details on Markups, click here.