How it works
Margin and markup both describe profit, but against different bases. Margin is profit as a share of the selling price. Markup is profit as a share of the cost.
A product that costs ₹80 and sells for ₹100 has a profit of ₹20. That is a 20% margin (20 ÷ 100) and a 25% markup (20 ÷ 80).
Mixing the two up leads to underpricing. To get a 20% margin you need a 25% markup, not 20%.
The formula
Margin % = (price − cost) ÷ price × 100
Markup % = (price − cost) ÷ cost × 100. To get a target margin, price = cost ÷ (1 − margin ÷ 100).
A worked example
Cost ₹800 and a target margin of 20% means a selling price of ₹1,000: profit ₹200, margin 20%, markup 25%.
Frequently asked questions
Which should I use to price my products?
Many businesses think in margin because it relates to revenue. Markup is simpler to apply to a cost. Choose one and use it consistently.
Does this include GST and other costs?
No. Enter your cost including all costs you want to count, and a selling price before GST.
Why can margin never reach 100%?
It would need a cost of zero. Markup, though, can be over 100% if you sell at more than double the cost.