Margin vs. Markup: What's the Difference?
While often used interchangeably, **Margin** and **Markup** represent different accounting perspectives. Understanding both is key to ensuring your business remains sustainable and profitable.
- Gross Margin: This is the percentage of the selling price that is profit. It is calculated as:
(Price - Cost) / Price. - Markup: This is the percentage added to the cost to reach the selling price. It is calculated as:
(Price - Cost) / Cost.
For example, if you buy a product for $50 and sell it for $100, your markup is 100%, but your profit margin is 50%. Our calculator helps you visualize these numbers instantly so you can set competitive prices that cover your overhead and generate growth.