# What is the difference between markup and margin?

Margin is profit as a share of the selling price; markup is profit as a share of the cost. On a $100 sale that costs $80, the $20 profit is a 20% margin and a 25% markup. ProfitDrawer's price per job calculator uses margin, so a 20% margin means 20% of the price is profit. To price for a target margin, divide your cost by 1 minus the margin: $80 / 0.80 = $100.

Conversions:

- Markup = margin / (1 minus margin)
- Margin = markup / (1 + markup)

| Margin | Same as markup |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 50% | 100% |

The common mistake is adding a margin percent to cost as if it were markup. If you want a 30% margin on an $80 cost and add 30% to cost, you charge $104 and keep only about 23% of the price. The right price is $80 / 0.70 = $114.29.

Product sellers often talk in markup (cost times a factor), while profit reports and bookkeeping spreadsheets show margin. Pick one, write down which one you use, and use it the same way every time you price.

- Source: [Price Per Job Calculator for Service Businesses](https://profitdrawer.com/tools/price-per-job-calculator.html)
- Updated: 2026-10-29
- Published: 2026-10-29
- Category: Pricing and profit
- Canonical: https://profitdrawer.com/answers/what-is-the-difference-between-markup-and-margin.html
- Publisher: ProfitDrawer (https://profitdrawer.com)