Margin vs markup (comparison)
Margin and markup are two different ways of looking at your profit on a sale.
They both focus on the same amount of money – the difference between your buying and selling prices. And they both express that amount as a percentage. However, margin shows it as a percentage of income while markup shows it as a percentage of costs.
Your markup is always bigger than your margin, even though they refer to exactly the same amount of money.
Markup
Tells you how much you bump up the prices of the things you sell.
Margin
Tells you what percentage of income is gross profit.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.
