Markup is the percentage added to cost to set a selling price. If a product costs £10 and sells for £20, the markup is 100%. But the profit margin is 50%, not 100%. Confusing markup and margin is a common pricing mistake.
Markup formula
Markup = profit ÷ cost × 100
Cost
Selling price
Profit
Markup
Margin
£10
£15
£5
50%
33.3%
£10
£20
£10
100%
50%
£20
£30
£10
50%
33.3%
£40
£80
£40
100%
50%
Markup vs margin
Markup looks at profit compared with cost. Margin looks at profit compared with selling price. Business reporting often uses margin, while pricing conversations often use markup. Both are useful, but they must not be mixed.
Why markup alone is not enough
A markup may cover product cost but fail to cover fees, shipping, ads, refunds, and overhead. A 100% markup sounds large, but after platform fees and ad costs, the true net margin may be modest.
Common mistakes
Thinking 100% markup means 100% profit margin.
Applying markup only to product cost.
Ignoring platform fees and payment fees.
Using the same markup across products with different return rates.
Discounting without recalculating margin.
Not accounting for wholesale or bundle pricing.
Practical takeaway
Use markup to build a starting price, then check final margin after all costs. If the final margin is weak, the markup is not high enough or the business model needs adjustment.
FAQ
What is markup?
Markup is profit expressed as a percentage of cost.
Is markup the same as margin?
No. Margin uses selling price as the base, while markup uses cost as the base.
Why does the difference matter?
Confusing markup and margin can lead to underpricing.
What is a 100% markup?
It means the selling price is double the cost.
Should I price only from markup?
No. Also consider fees, shipping, ads, demand, and perceived value.
Business note: CalcBeacon eCommerce guides are educational and designed to explain calculations, pricing logic, and profitability checks. They are not tax, legal, accounting, or financial advice. For important business, VAT, tax, or platform compliance decisions, check official guidance or speak with a qualified professional.
