Markup is the amount added to the cost of a product to determine its selling price. It is expressed as a percentage of the cost.
Selling Price = Cost × (1 + Markup% ÷ 100)
Profit = Selling Price − Cost
Margin% = (Profit ÷ Selling Price) × 100
Cost = $50, Markup = 40%. Selling price = $50 × 1.40 = $70. Profit = $20. Margin = (20 ÷ 70) × 100 = 28.6%.
These are often confused. Markup is a percentage of the cost. Margin is a percentage of the selling price. A 40% markup gives a 28.6% margin, not 40%.