Profit, margin and markup — how they relate
Profit is the simplest of the three: it's what's left after you subtract cost from the selling price. The two percentages describe that same profit from different angles. Margin expresses profit as a share of the selling price, while markup expresses it as a share of the cost. That's why the markup percentage is always the larger of the two for a profitable item.
Worked example
Buy an item for 40 and sell it for 100. The profit is 60. As a margin that's 60 ÷ 100 = 60%; as a markup it's 60 ÷ 40 = 150%. Same profit, two very different-looking percentages — which is exactly why it pays to know which one someone means.
Frequently asked questions
What if I sell below cost?
The profit will be negative — a loss — and both percentages will be negative too. The calculator shows this in red.
Does the currency matter?
No. Enter both numbers in the same currency and the profit comes out in that currency; the percentages are currency-independent.
Is this before or after tax and overheads?
This is gross profit on a single item — selling price minus its direct cost. It doesn't include overheads, taxes or other operating expenses.