A 50 percent markup is not a 50 percent margin
Markup and margin both wear a percent sign. They divide the same profit by different numbers. A contractor who says 50 percent markup and a shop that says 50 percent margin are not offering the same shelf price. The argument usually starts because someone heard the 50 and missed the noun.
Hold the cost still
Cost is $25. A 50 percent markup means the profit is half of the cost. Half of $25 is $12.50. The price is $37.50. Markup is profit divided by cost: $12.50 divided by $25 is 50 percent.
Margin is profit divided by the selling price, not by the cost. $12.50 divided by $37.50 is one third, about 33.3 percent. You marked the cost up by half and the margin is about 33 percent. Anyone who hears “we make 50 percent on it” still does not know which division you used.
The other instruction, same cost
A 50 percent margin means the profit is half of the price, so the cost is the other half. Price equals cost divided by 0.50. Twenty-five divided by 0.50 is $50. The profit is $25. The markup on that price is $25 divided by $25, which is 100 percent. A 50 percent margin is a 100 percent markup. Say that before you accept the quote.
Same cost. Same spoken 50 percent. The prices are $37.50 and $50. They are $12.50 apart. The markup and margin page prints both percents once you type a cost and a price. You do not have to convert them at the counter.
The other example on the same page
A $40 cost sold at $64 is a different pair, included so the $25 case is not the only one. Profit is $24. Markup is $24 divided by $40, which is 60 percent. Margin is $24 divided by $64, which is 37.5 percent. Neither line is 50. The divisions are the same two divisions as the $25 case.
Two quotes, one sentence
A customer holding the $37.50 quote and the $50 quote has been told both vendors “take 50 percent.” The first vendor keeps $12.50. The second keeps $25. The difference is not a mood. It is which number got divided. Asking “what is your percent” without “percent of cost, or percent of price” is how the $12.50 argument starts. Ask for the dollar profit, or type both prices into the calculator and read the two lines.
If the job also needs $15 of material you had not put in the $25, both quotes are short by the same forgotten cost. A 50 percent markup on $40 (the original $25 plus the $15) is a $60 price, not $37.50. Leaving the $15 out and then arguing about the percent is two mistakes stacked. Fix the cost first. Then choose the word.
Leave the tax out of both boxes
Sales tax you collect and remit is not your profit and not your cost. Leave it out of both numbers or the margin describes the government’s money. Shipping you pay, and a card fee you cannot pass on, belong in the cost if you want the margin to describe what you keep. The page will not invent those extras. A 50 percent markup on a $25 item that also cost you $3 to ship is a markup on $28 if the $3 is a real cost, and it is a story you are telling yourself if you leave the $3 in a drawer.
Use the form
These notes are estimates for everyday use. They are not tax, payroll, mortgage, or legal advice. Type your own contract into the calculator.