Markup calculator
Buy at 40, mark up 50%, sell at 60. The profit is 20 — which is 50% of the cost but only 33% of the selling price. Markup uses cost as the denominator; margin uses the price. To get a 50% margin from a cost of 40 you would have to sell at 80, a 100% markup. Confusing the two is the single most expensive arithmetic error in small retail.
Markup is profit as a percentage of cost. A 40 cost with a 50% markup sells at 60, for a 20 profit — which is a 50% markup but only a 33.3% margin, because margin divides the same profit by the selling price instead.
How to calculate markup
Different trades habitually speak in different terms, which is why the confusion persists. Wholesale and manufacturing quote markup because they start from cost. Retail and finance quote margin because they start from revenue and it is what appears on a profit and loss statement. Both describe the same trade, and every markup has exactly one corresponding margin: 25% markup is 20% margin, 50% is 33.3%, 100% is 50%, 200% is 66.7%. When someone says "we work on fifty per cent", the only safe response is to ask which fifty.
Questions
Markup divides profit by cost; margin divides the same profit by the selling price. A 50% markup is a 33.3% margin.