Pricing basics

Margin versus markup: what is the difference?

Both terms describe the relationship between cost and selling price, but they use different reference points. Keeping them separate prevents confusing a target with a result.

Profit margin uses selling price

Profit margin asks what share of the selling price remains after cost. It is useful when you want to understand how much of each sale is left after the costs included in your calculation.

Markup uses cost

Markup asks how much the selling price is above cost, expressed relative to cost. It is useful when you start with a cost and want to apply a pricing rule.

Do not compare unlike targets

A margin target and a markup target will not produce the same selling price. Check which measure your recipe, shop, or wholesale customer expects before deciding that a price is too high or too low.

Include the costs that matter

A result is only as useful as its inputs. Decide whether your costing policy includes packaging, labor, overhead, waste, delivery, and platform fees, and apply the same policy when comparing products.

Use the result as a review

Use BakeCostDee to display cost, selling price, profit, margin, markup, and a target-price suggestion from your entered values. Review the result with your real business context; it is not a guarantee of profit.