Markup or margin: which number do you quote?

Understand why the same cost and price produce two different percentages, and which one belongs in a quote.

Markup and margin use the same profit but divide it by different bases: cost for markup, revenue for margin. A 100 percent markup is a 50 percent margin, so quoting one while meaning the other can turn a healthy price into a loss-making one.

Use markup when you price up from cost

The markup calculator turns a cost and a target markup into a selling price, or reads both markup and margin from a cost and price pair. Use it when your process starts with what an item costs you and adds a planned percentage.

Use margin when you reason from revenue

Profit margin expresses profit as a share of revenue, which is the figure accounting and investors usually mean. Use it to compare products of different costs fairly, because a margin percentage is bounded by 100 while markup is not.

Check both before publishing a discount

A discount reduces revenue and therefore hits margin harder than the same percentage reduces markup. Run the discount calculator, then recheck margin on the new price rather than assuming the original percentage still holds.

Tools covered in this guide

Markup Calculator
Price a product from a target markup, or read markup and margin from cost and price.
Profit Margin & Markup Calculator
Calculate profit margin, markup percentage, selling price, and net earnings with this free business profit margin calculator. Optimize your product pricing.
Discount Calculator
Work out sale savings, final price, and totals for any discount percent.

Frequently asked questions about pricing ratios

Is markup always higher than margin?

Yes, for the same profit and positive cost. Markup divides by the smaller base, so the percentage is larger whenever there is any profit.

How do I convert markup to margin?

Margin equals markup divided by one plus markup. A 50 percent markup becomes 50 divided by 150, or 33.3 percent margin.

Which number should appear in a client quote?

State the price and, if you show a percentage, name it explicitly. Ambiguous percentages are a common source of disputes when one side assumes margin and the other markup.