Profit Margin vs Markup: How to Set Selling Price

Many small businesses know their buying cost but are less clear about the difference between margin and markup. Knowing the difference helps you set prices, offer discounts and still understand whether a sale is profitable.

Term | Meaning | Simple use

Cost price | What the item or service costs you | Starting point for pricing

Markup | Profit added on top of cost | Useful when building a selling price

Margin | Profit as a share of selling price | Useful when reviewing profitability

Basic profit: Profit = Selling Price - Cost Price

Pricing details to check

Cost of goods, material or direct service delivery

Packaging, delivery and payment collection costs

GST or other tax treatment where relevant

Discounts you may offer later

Minimum profit needed to make the work worthwhile

Plan margin and markup: Use the Profit Margin Calculator when it is available, and use the GST Calculator for tax-inclusive price checks.