Profitability & Margins
Markup
The percentage added to COGS to determine the selling price. Often confused with margin.
Formula
Markup (%) = ((Selling Price - Cost) / Cost) × 100What is Markup?
Markup is the percentage you add on top of your cost to set your selling price. It's calculated based on cost, not on revenue (which is how margin works).
Markup vs. Margin
This is one of the most common confusions in e-commerce:
- Markup is based on cost: how much you add on top
- Margin is based on revenue: what percentage of the price is profit
A 100% markup equals a 50% margin. They describe the same profit from different perspectives.
Example
Cost: $20. Selling price: $50. Markup = (($50 - $20) / $20) × 100 = 150%.
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