Margin vs Markup

Margin vs Markup

The difference between margin and markup is that margin refers to sales minus the cost of goods sold (COGS), while markup refers to the amount by which the cost price of a product is increased to determine the selling price.

 

Margin

Unit Price = Unit Cost / (1 – Margin %)

Example

Margin = 15%

Unit Cost = $2.50

Unit Price = $2.50 / (1 – 0.15) = $2.50 / 0.85 = $2.9411

 

Markup

Unit Price = Unit Cost *(1 + Markup %)

 

Example

Markup = 15%

Unit Cost = $2.50

Unit Price = $2.50 * (1 + 0.15) = $2.50 * 1.15 = $2.875     


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