Question

The difference between the wholesale price and retail price, which is it ?

Markup
Margin

Answer 1

The dollar difference between wholesale (cost) and retail (selling) price is simply gross profit. Whether you call it "markup" or "margin" depends on how you express it:

- Markup = (Selling price − Cost) / Cost — percent over cost.
- Margin (Gross profit margin) = (Selling price − Cost) / Selling price — percent of the selling price.

Example: cost = $70, retail = $100
- Dollar difference = $30
- Markup = 30 / 70 = 42.86%
- Margin = 30 / 100 = 30%

Conversion formulas:
- margin = markup / (1 + markup)
- markup = margin / (1 − margin)

Which to use: retailers often set prices with a markup on cost; accountants and financial reports usually show margin.