BillmanQuick answer: Margin is profit as a % of the selling price; markup is profit as a % of the cost. Buy at ₹80 and sell at ₹100: margin 20%, markup 25%.
The difference
| Formula | ₹80 cost, ₹100 price | |
|---|---|---|
| Margin | Profit ÷ Selling price × 100 | 20% |
| Markup | Profit ÷ Cost × 100 | 25% |
Many shop owners say “I keep 20%” and add 20% to the cost — that is a 20% markup, which is only a 16.7% margin. On ₹10 lakh of sales, that gap is about ₹33,000 a year.
Setting a price for a target margin
Selling price = Cost ÷ (1 − margin %). For a 20% margin on ₹80: ₹80 ÷ 0.80 = ₹100.
Keep GST out of it
Work out margins on prices without GST. The GST you collect goes to the government — it is not your profit.
See profit per item in Billman
Billman’s Profit & Loss report shows the cost, sale value and gross profit for every product, so you can spot low-margin items.
FAQ
Is a 25% markup the same as a 25% margin?
No. A 25% markup is a 20% margin. A 25% margin needs a 33.3% markup.
Which should I use?
Use margin to understand profit on sales; use markup when setting prices from cost. Just don’t mix them up.
See real profit on every item
Billman does GST, e-way bills and GSTR-1 for you — even offline.