The maker's costing glossary
Margin vs Markup
The single most common — and most expensive — pricing mistake makers make.
Margin and markup describe the same gap between cost and price, but against different bases. Margin is profit as a percentage of the PRICE; markup is the addition as a percentage of the COST. Because the bases differ, the two numbers are never equal — and a 50% markup is only a 33% margin. Treat them as interchangeable and you quietly undercharge on every single sale.
Why it matters
This isn't pedantry — it's money. A maker who wants a 50% margin but applies a 50% markup is charging far too little and won't understand why the business feels tight despite good sales. Over a year of orders, the gap is enormous. Getting this one distinction right is often the fastest profit fix a maker can make.
How to calculate it
Convert between them directly: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin). A 100% markup is a 50% margin; a 50% markup is a 33% margin; a 33% markup is a 25% margin.
Margin = markup ÷ (1 + markup) • Markup = margin ÷ (1 − margin)
Example
You add 50% to a $60 cost → price $90. Markup is 50%, but margin is (90 − 60) ÷ 90 = 33%. To actually earn a 50% margin you'd price at $120 — a 100% markup.
In practice
When a supplier, a course, or a competitor quotes 'a 40% markup', translate it to margin before you copy it — otherwise you're importing someone else's math into your prices.
Common mistakes
- Setting a 'target margin' in your head but applying it as a markup on cost.
- Comparing your prices to others' without checking which number they mean.
- Assuming higher markup always means higher margin regardless of base.
How CrafterBy handles it
CrafterBy always displays margin and markup together, so this mistake simply can't happen inside the tool.