BillmanMargin and markup: what is the difference?
Both measure profit, but against different numbers. Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost.
How to use this margin calculator
- On Find my profit, enter your cost price and selling price to see the profit, margin % and markup %.
- On Find selling price, enter the cost and the margin or markup you want, to get the price to charge.
- Add the MRP (optional) to see the discount you are giving off MRP.
- Use prices without GST for a true profit figure.
Markup to margin: quick table
| Markup on cost | Margin on selling price |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20% |
| 33.33% | 25% |
| 50% | 33.33% |
| 100% | 50% |
Margin = Markup ÷ (100 + Markup) × 100. Markup = Margin ÷ (100 − Margin) × 100.
Keep GST out of your margin
Work out margin on prices without GST. The GST you collect from customers is paid to the government (after input tax credit), so it is not your profit. Including it makes your margin look bigger than it is.
Selling below MRP
MRP is the highest price you may charge, and it includes GST. If you sell below MRP, your discount off MRP is (MRP − selling price) ÷ MRP × 100. A ₹100 MRP item sold at ₹92 is an 8% discount, and it comes out of your margin.
The most common pricing mistake
Adding 20% to the cost does not give a 20% margin. ₹80 + 20% = ₹96, which is only a 16.67% margin. For a 20% margin, divide the cost by 0.8: ₹80 ÷ 0.8 = ₹100.