Profit Margin vs Markup: Understanding the Difference – SumZA Skip to content
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Profit Margin vs Markup: Understanding the Difference

Many South African business owners confuse profit margin and markup, which can lead to pricing mistakes and reduced profitability.

Key Difference

  • Markup: percentage added to cost price to get selling price
  • Margin: percentage of selling price that is profit

Example

If cost is R100 and you add 50% markup, selling price is R150. But your profit margin is 33.3% (R50/R150), not 50%.

Use our Profit Margin Calculator and Markup Calculator for instant calculations.