OnlineCalculatorThe difference in one line
Markup is profit as a percentage of what you paid. Margin is profit as a percentage of what you charged. Same money, different denominator.
Buy for AED 100, sell for AED 150. Your profit is AED 50. That is a 50% markup on cost, but a 33.3% margin on the sale price. If you were targeting a 50% margin and applied a 50% markup, you have just underpriced by a third.
Converting between them
| Markup | Equivalent margin |
|---|---|
| 20% | 16.7% |
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
To hit a target margin, the markup you need is: margin divided by (100 minus margin), times 100. For a 40% margin you need a 66.7% markup.
Which one to use
Use markup when pricing forwards from a known cost — it is the more natural operation at the point of setting a price. Use margin when analysing performance, because margin is what appears on a profit and loss statement and what investors and lenders will ask about.