Profit Margin vs Markup - Which One Should You Use?

I Used The Wrong One and Lost $500

A client asked for 30% discount. I thought my margin was 30%, so I said yes. Later I realized my markup was 30%, but my margin was only 23%. I gave a discount bigger than my profit. I lost money on that job.

Simple Breakdown

Use Markup When You Set a Price

Cost $50, you want 40% markup = Sell for $70. Use markup to CREATE a price.

Use Profit Margin When You Check Your Health

You sell for $70, cost $50 = 28.5% margin. Use margin to CHECK if your business is healthy.

Final Advice

Always know both. My phone shortcut: Advanced Calculator. Enter cost and price, it shows markup and margin side by side. No more $500 mistakes.