The difference between markup and margin
Both measure the same profit, but against a different base:
Because the selling price is always larger than the cost, margin is always smaller than markup for the same sale.
Example
Cost ₹100, selling price ₹150. Profit ₹50. Markup = 50 ÷ 100 = 50%. Margin = 50 ÷ 150 = 33.33%.
Why the confusion is costly
If your business needs a 40% gross margin to cover overheads but you add a 40% markup, your actual margin is only 28.6%. Pricing teams, accountants and salespeople should agree which measure they are using. Accounts and financial statements almost always report margin.
Frequently asked questions
Is a 100% markup a 50% margin?
Yes. Doubling the cost (100% markup) means half the selling price is profit, which is a 50% margin.
Can margin be 100%?
Only if the cost is zero. For any real cost, margin stays below 100% while markup has no upper limit.
Results are for planning and information only and are not accounting or financial advice. Check important figures with your accountant.
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