Markup vs margin
Profit = price − cost. Markup % = profit ÷ cost × 100. Margin % = profit ÷ price × 100. A $40 cost sold at $64 is 60% markup and 37.5% margin. If you want a 40% margin, price = cost ÷ (1 − 0.40).
Worked example
Cost $40, sell at $64: profit $24, markup 60% (24 ÷ 40), margin 37.5% (24 ÷ 64). To hit a 40% margin on a $40 cost, price = 40 ÷ 0.60 = $66.67.
A contractor who says “40% markup” and a store that says “40% margin” are not using the same number. Ask which one they mean before you quote.
Common questions
Which number do retailers use?
Stores usually talk margin. Vendors and trades often talk markup. Ask which one they mean.
Can margin be 100%?
Only if cost is 0. A 50% margin means half the price is profit.