Why the distinction matters
Margin measures profit as a percentage of selling price. Markup measures profit as a percentage of cost. Because they use different starting values, the percentages are not interchangeable.
A simple example
If an item costs £40 and sells for £60, gross profit is £20. Markup is 50% because £20 is half of the £40 cost. Margin is 33.3% because £20 is one third of the £60 selling price.
Which should you use?
Markup is convenient when building a price from cost. Margin is often more useful when evaluating profitability because it tells you what share of sales is left after direct cost. Always confirm which measure a supplier, retailer or colleague means.
ProfitMaths guides provide general educational information, not personalised accounting, tax, legal or financial advice.