What is the difference between margin and markup?

Margin is profit as a share of the selling price; markup is profit as a share of the cost. A product costing AED 100 and selling at AED 150 carries a 50% markup but a 33.3% margin.

How do I convert markup to margin?

Divide the markup by one plus the markup. A 50% markup becomes 0.5 / 1.5 = 33.3% margin. Going the other way, divide the margin by one minus the margin.

Profit Margin & Markup Calculator

Summary Response

"Margin is profit as a share of the selling price; markup is profit as a share of the cost. They are different numbers for the same trade: a product costing AED 100 and selling at AED 150 carries a 50% markup but a 33.3% margin."

Pricing Considerations

Quote prices excluding VAT when comparing margin: including the 5% inflates apparent revenue without adding profit.

Imported stock should be costed at landed cost, not invoice value. Duty, freight and clearance can move a real margin by several points.

Payment terms matter as much as margin: a 30% margin on 120-day terms can be worth less than 20% on payment in advance.

Frequently Asked Questions

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