Markup and margin both describe profit, but against different bases — and confusing them is a classic pricing mistake. The same dollar of profit is a smaller number as a margin than as a markup.
Two views of the same profit
Margin is profit as a share of the selling price; markup is profit as a share of the cost. A product that costs $60 and sells for $100 has a $40 profit — a 40% margin but a 66.7% markup. Knowing which one a supplier or report means keeps your pricing consistent.
Converting between the two
Markup and margin are linked, so you can convert either way: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin). A 50% markup is a 33% margin; a 50% margin is a 100% markup. The gap widens as the numbers grow, which is why assuming a markup figure is your margin will quietly under-price you.
Pricing from a target margin
If you know the margin you need, price by dividing cost by (1 − margin). To earn a 40% margin on a $60 item, that's $60 ÷ 0.6 = $100. Note this is different from adding a 40% markup, which would give only $84 and a slimmer 28.6% margin — a common and costly mistake.
Margin is usually the more useful lens for a business overall, because it tells you what share of every sale is left to cover overhead and profit. Markup is handy at the product level for setting prices from cost, but translate it to margin before judging whether the business is healthy.