The basic difference
Markup and margin both describe the same AED profit, but divide it by a different base:
- Markup % = (selling price − cost) ÷ cost × 100
- Margin % = (selling price − cost) ÷ selling price × 100
An item that costs AED 100 and sells for AED 150 has a 50% markup but only a 33.33% margin — the same AED 50 profit, different denominators.
Worked example
An office-supplies business buys a printer for AED 1,200 and wants a 30% markup on cost: markup amount = AED 1,200 × 30% = AED 360, so selling price = AED 1,560. That AED 360 profit is only 23.08% margin — not 30%. To get a genuine 30% margin instead, the required price is AED 1,200 ÷ (1 − 30%) = AED 1,714.29.
Converting between markup and margin
- Markup → margin: margin = markup ÷ (1 + markup)
- Margin → markup: markup = margin ÷ (1 − margin)
A 50% markup converts to a 33.33% margin. A 40% margin converts to a 66.67% markup — as the target margin rises, the required markup increases quickly because margin is measured against the final selling price, not cost.