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What is markup and how is it different from margin

2026-05-18 10:05 · Pricing Guides

Learn what markup means, how it differs from profit margin, and why ecommerce pricing decisions often need both numbers.

Markup and margin are closely related, but they are not interchangeable. Both describe profit, yet each starts from a different base number. Markup starts from cost. Margin starts from selling price.

A quick example makes the difference easier to see. If a product costs 60 dollars and sells for 90 dollars, the profit is 30 dollars. The markup is 50 percent because 30 divided by 60 equals 0.5. The margin is 33.33 percent because 30 divided by 90 equals 0.3333.

This matters because sellers often think in markup when they are setting prices from supplier costs, but they think in margin when they review performance, profitability, and marketing efficiency. If you confuse the two, you may believe a product is more profitable than it really is.

Markup is useful during pricing decisions, especially when you need a repeatable rule such as cost plus 40 percent. Margin becomes more useful when you compare products, track overall profitability, or report results across a catalog.

In practice, the best habit is to review both numbers at the same time. Use markup to build a price from cost, then confirm the resulting margin still works for your business after shipping, fees, and advertising are considered.

If you need a fast way to compare both values, the Markup Calculator can show markup, profit, and margin from the same two inputs.