1. What is Margin vs Markup?

Margin and markup are both ways of expressing profit, but they calculate it differently. Margin shows profit as a percentage of the selling price, while markup shows profit as a percentage of the cost price.

2. How Does the Calculator Work?

The calculator uses these key formulas:

Where:

• \( Price \) — Selling price in USD
• \( Cost \) — Cost price in USD

Explanation: Margin represents the percentage of the selling price that is profit, while markup represents the percentage added to the cost to determine the selling price.

3. Importance of Margin and Markup

Details: Understanding both metrics is crucial for pricing strategies, financial analysis, and business profitability. Margin is more useful for understanding profitability, while markup is more useful for setting prices.

4. Using the Calculator

Tips: Enter the selling price and cost price in USD. Both values must be positive numbers, and price should be equal to or greater than cost for meaningful results.

5. Frequently Asked Questions (FAQ)

Q1: Why is margin always lower than markup?
A: Because margin is calculated as a percentage of the higher selling price, while markup is a percentage of the lower cost price.

Q2: What's a good margin percentage?
A: This varies by industry, but generally 10-20% is considered good for most businesses.

Q3: How do I convert markup to margin?
A: Margin = Markup / (1 + Markup). For example, 50% markup = 33.33% margin.

Q4: Which should I use for pricing?
A: Markup is better for setting prices, while margin is better for analyzing profitability.

Q5: What if my cost is higher than my price?
A: This indicates you're selling at a loss. Both margin and markup will be negative in this case.