Profit margin uses revenue
Margin expresses profit as a percentage of selling price or revenue. If an item sells for 100 and costs 70, profit is 30 and margin is 30%.
Markup uses cost
Markup expresses profit as a percentage of cost. With the same numbers, markup is 30 ÷ 70 × 100, or about 42.86%.
Why the distinction matters
Using markup when you mean margin can produce unexpected prices. Businesses should define which metric they use in pricing rules and reports.
Use consistent cost definitions
Gross margin, operating margin, and net margin use different cost definitions. For official accounts, follow your accounting method and professional advice.
Try the calculator
Use the calculator below when you want to apply the formula to your own numbers.
Open Profit Margin Calculator →Methodology: QuickSolve guides explain common mathematical formulas in plain language. Where institutions, lenders, employers or accounting systems use their own rules, those official rules take priority.