Retail Margin vs Markup: What Is the Difference?

Retail margin and markup both describe profitability, but they use different bases. Confusing them can cause pricing errors.

Retail Margin Formula

Margin (%) = Profit / Selling Price × 100

Markup Formula

Markup (%) = Profit / Cost × 100

Simple Example

If a product costs $20 and sells for $40, the gross profit is $20. Margin is 50%, while markup is 100%.

Discounts Reduce Margin

A discount lowers the selling price while product cost usually stays the same. Payment and marketplace fees can reduce profit further.

Use the Retail Margin Calculator

Use the Retail Margin Calculator to compare margin, markup, selling fees, discount impact, and break-even retail price.