Markup vs. Margin: What’s the Difference? Explained using Excel

Margin or profit margin and markup are both accounting terms that use the same inputs - Revenue, cost, and profit, but they show different information. Both profit margin and markup use revenue and costs as part of their calculations. Revenue - Cost = Profit. The difference is margin takes the profit and divides it by Revenue or Retail price to get the margin percentage. Markup takes profit and divides it by cost to get the Markup percentage. Here is an easy example. An item costs $8, and your markup is $2 for a retail price of $10. Your markup percentage is 25%. The $2 profit is divided by the $8 cost. Your profit margin percentage is 20%. The $2 profit is divided by the $10 retail price or revenue. Margin percentage: profit / revenue, Markup percentage: profit / cost

Chapters:
0:00 intro
0:50 Items that are the same
1:08 Margin percentage
1:22 Markup percentage
2:09 Markup vs. Margin percentages
2:55 Absolute reference

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[gregorytaylor]

Chris, I use a simple formula to price at desired gross margin. For example, if I want to make 20%GM the formula is Cost / ( 1 - .20 ) . Conversely Markup formula is simply Cost * 1.25.

[msemmafw]

Is the cost including shipping and packaging also ?

[kosmotto]

I cant tell if this is spooky math, A weird tiktok math problem Like Elon has 178 billion, s he could give everyone a million and still be rich