Business
Profit Margin vs Markup — What’s the Difference?
Direct answer
Profit is selling price minus cost. Margin expresses profit as a percentage of selling price, while markup expresses the same profit as a percentage of cost. They are not interchangeable.
Key takeaways
- Profit is a rupee amount.
- Margin divides profit by selling price.
- Markup divides profit by cost.
- A 25% margin is not a 25% markup.
Worked example
If a product costs Rs 45,000 and sells for Rs 60,000, profit is Rs 15,000. Margin is 15,000 ÷ 60,000 = 25%. Markup is 15,000 ÷ 45,000 = 33.33%.
Which percentage should you use?
Use margin when asking what share of revenue remains as profit. Use markup when adding a percentage to cost to set a price. Always state which one you mean in pricing discussions.
Original reference table
One profit, two percentages
| Measure | Calculation | Result |
|---|---|---|
| Profit | Rs 60,000 − Rs 45,000 | Rs 15,000 |
| Margin | Rs 15,000 ÷ Rs 60,000 | 25% |
| Markup | Rs 15,000 ÷ Rs 45,000 | 33.33% |
Original visual
Where the percentage starts
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Useful questions
Quick answers
What selling price gives a 25% margin on Rs 45,000 cost?
Rs 60,000, because Rs 45,000 ÷ (1 − 0.25) = Rs 60,000.
Sources & references
How this guide was checked
Seedha Hisab
Standard arithmetic definitions and worked calculation
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Update history: 11 September 2026 — guide created or verified against the source and methodology shown above.