The terms margin and markup both refer to profitability but are calculated differently. Margin is the percentage of the selling price that represents profit, calculated as (Selling Price – Cost) / Selling Price x 100. For example, if a product sells for 100 and costs 60, the margin is 40%.
Markup, on the other hand, is the percentage added to the cost to determine the selling price, calculated as (Selling Price – Cost) / Cost x 100. Using the same example, the markup is 66.67%. While margin focuses on sales price, markup focuses on cost, and both impact pricing and profitability strategies.