A shop buys for 100 and sells for 200. Is that a 50% margin or a 100% markup? Both, and that is the whole problem: margin measures profit against the selling price, markup measures it against the cost. Quoting one when you meant the other is how a price ends up half of what it should be, and it happens most often on the products where the mistake costs most.

Using it in three steps

1. 1 Type the two numbers you already know — cost and price, or cost and the margin you want.
2. 2 The other two fill in and are marked as calculated, so you always know which numbers are yours.
3. 3 Read margin and markup together at the bottom — that pair is the answer worth remembering.

Turning a target margin into a price

The mistake here is adding the margin to the cost. For a 40% margin on a cost of 60, adding 40% gives 84 — but 24 profit on an 84 price is only a 28.6% margin. The price has to be cost divided by (1 − margin), which is 100. Enter cost and margin and the tool does that division; the markup it shows back, 66.7%, is the number you would have needed to add.

Which one your buyer means

Retail and finance usually speak in margin, because it answers "what share of this sale is profit". Wholesale, manufacturing and trades usually speak in markup, because they start from a cost and build a price on top. When a supplier says "we work on 30%", it is worth asking which one — the difference on a 100 cost is a price of 143 versus 130, and that gap is somebody's entire profit.