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What’s the difference between markup and margin?

Markup adds profit on top of cost, while margin measures profit within the final price.

Both markup and margin describe profit — they just answer different questions.

Markup answers: “How much profit am I adding on top of my cost?”

Margin answers: “How much of the final price do I actually keep as profit?”

Let's break down the math in simple terms:

Markup = profit ÷ cost
Margin = profit ÷ price you charge the customer

Same job. Same profit. Different math. An example:

Your cost is $100
You want $25 in profit

If you add $25 on top of the cost, that’s a 25% markup.You charge the customer $125. But your profit ($25) is only 20% of what the customer paid. That means your margin is 20%.

Target Margin Approximate Markup
10% margin ~11% markup
20% margin ~25% markup
25% margin ~33% markup
30% margin ~43% markup

How Beam thinks about this

Beam uses markup when calculating prices. What this means in practice is if you’re aiming for a specific profit margin, you’ll need to set a slightly higher markup to get there.