Margin and markup both measure profit from the same cost and sell price, but they divide by a different base which means the same dollar profit gives two different percentages.
Margin & Markup Calculator
Margin / Markup
33.3% / 50.0%
$20.00 profit per unit
The margin and markup formulas
Gross margin = (sell price − cost) ÷ sell price. Markup = (sell price − cost) ÷ cost. Both use the same profit figure in the numerator, but margin divides by sell price while markup divides by cost — which is why the two percentages are never equal for the same product (margin is always the smaller number).
This distinction matters most when setting prices: pricing to hit a target margin percentage and pricing to hit the same target markup percentage produce two different sell prices. Confusing which one a pricing policy actually refers to is a common way margins quietly erode over time.
See also: the GMROI calculator, the landed cost calculator, carrying cost.
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