Same numbers, different percentages.
Direct answer
Markup is the profit as a percentage of cost: (price − cost) ÷ cost. Margin is the profit as a percentage of price: (price − cost) ÷ price. If an item costs 60 and sells for 100, markup is 66.7 percent and margin is 40 percent.
Example
| Value | |
|---|---|
| Cost | 60 |
| Price | 100 |
| Profit | 40 |
| Markup | 40 ÷ 60 = 66.7% |
| Margin | 40 ÷ 100 = 40% |
Setting a price from a target margin
Price = Cost ÷ (1 − margin). For a 40 percent margin on a cost of 60: 60 ÷ 0.6 = 100.
Where Teyro fits
Teyro's How to Price a Product or Service course turns this into short lessons you can play in a few minutes a day. It has 50 lessons, and you can start free.
The bottom line
Choose one and be consistent.
