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What is a margin and how is it different from a markup?

April 26, 2017different margin Markup

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What is a margin and how is it different from a markup?

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Occasionally people confuse the calculations for markup and margin. Margin is the portion of your sell price that you keep as profit. When the margin is expressed as a percentage then it is always as a percentage of the sell price. MarginCalc performs this type of calculation. Percentage margin normally never exceeds 100% (for that the cost price would have to be negative). Consider a situation in which your cost price is zero. You get to keep the entire sell price as profit and so the percentage profit margin is 100% Similarly, consider a situation in which your sell price is equal to your cost price. The percentage profit margin is 0%, you get to keep nothing as profit. Markup is an amount that you add to your cost price. When that is expressed as a percentage it is as a percentage of the cost price. This is not the type of calculation that MarginCalc performs.