Set a price from a target margin or markup, or read both off a cost and a price. Shows why a 50% markup is only a 33% margin.
What is the difference between margin and markup?
Both measure the same profit. Margin divides it by the selling price, markup divides it by the cost. Because the price is always the larger number, margin is always the smaller percentage. A 50% markup is a 33.3% margin.
Why does confusing them cost me money?
Say you want a 50% margin on a ₹1,000 item and you apply a 50% markup instead. You price at ₹1,500 when you needed ₹2,000, and lose ₹500 on every unit. Over a thousand units that is ₹5,00,000 of profit you priced away.
What markup gives me a 30% margin?
About 42.9%. The formula is markup = margin / (100 - margin) x 100. The table on this page lists the common ones: 20% margin needs a 25% markup, 25% needs 33.3%, 40% needs 66.7%, and 50% needs a full 100%.
Can a margin be more than 100%?
No. Profit can never exceed the selling price it is measured against, so margin tops out just below 100%. Markup has no ceiling - a ₹10 item sold at ₹1,000 carries a 9,900% markup and a 99% margin.
Which should I use to set prices?
Think in margin, price in markup. Margin is what your accounts and your investors read, and it tells you what share of revenue you keep. Markup is the multiplier you apply at the shelf. Set the margin you need, then convert.
Does this include GST?
No. Work in pre-tax figures on both sides. GST is collected on behalf of the government and passes through, so including it in either the cost or the price inflates your apparent profit.