The one-line difference
Both take the profit on a sale. Margin divides it by the selling price. Markup divides it by the cost.
margin = profit ÷ price × 100
markup = profit ÷ cost × 100
Buy at $60, sell at $100, and the $40 profit is a 40% margin and a 66.7% markup at the same time. Neither number is wrong, they just answer different questions.
The mistake that costs money
A business decides it needs a 40% margin, then adds 40% to its costs. A $60 item goes out at $84 instead of $100. Profit is $24, a 28.6% margin. On every sale it keeps about 11 points less than planned, and the shortfall is easy to miss because "40%" appears in both the plan and the price list.
Side by side
| Margin | Markup |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 25% | 33.3% |
| 33.3% | 50% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
| 75% | 300% |
Limits
Margin can never reach 100%, because that would mean the item cost nothing. Markup has no upper limit: a $5 item sold for $50 has a 900% markup and a 90% margin.