Business
Profit margin vs markup
Understand the difference between margin and markup with simple examples.
Published 2026-09-23
The short version
Margin measures profit as a percentage of revenue. Markup measures profit as a percentage of cost.
Because the denominators are different, the same price and cost can produce different margin and markup percentages.
A simple example
If an item costs $65 and sells for $100, the profit is $35. The margin is 35 divided by 100, or 35%. The markup is 35 divided by 65, or approximately 53.85%.
Which one should you use?
Use margin when reviewing revenue performance. Use markup when setting a selling price from a known cost. Always label the metric clearly in reports and conversations.