Markup vs Margin — What's the Difference?
Convert between markup percentage and profit margin. Calculate selling price from cost and desired margin.
Markup vs Margin: The Critical Difference
Markup is the percentage added to cost to get the selling price. A 50% markup on a $30 item: $30 × 1.50 = $45. Margin is profit as a percentage of the selling price. That same $45 item has a 33.3% margin ($15 profit / $45 price). The same dollar profit ($15) is a 50% markup but only a 33.3% margin. Confusing the two is one of the most common pricing mistakes in business.
Common Markups by Industry
Grocery: 25-50% markup (20-33% margin). Clothing: 100-300% markup (50-75% margin). Restaurants: 200-400% markup on food (67-80% margin). Software/SaaS: 500-2000% markup (83-95% margin). Jewelry: 100-300% markup. Understanding your industry standard prevents underpricing (leaving money on the table) and overpricing (losing customers).
A 1% price increase on a business with 10% net margins increases profit by 10% — without selling a single additional unit. Pricing is the most powerful profit lever available to any business. Most small businesses underprice because they calculate markup instead of margin, or because they fear losing customers over small price increases.
