Margin and markup both describe profitability, but they use different bases. Confusing them can turn a profitable quotation into an underpriced deal.
Margin divides profit by selling price. Markup divides the same profit by purchase cost. Because their denominators differ, 20% margin is not the same as 20% markup.
A product costs €80 and sells for €100. Unit profit is €20.
The money earned is identical; only the reference base changes.
For a target margin, divide cost by one minus the margin expressed as a decimal. For a target markup, multiply cost by one plus the markup.
This €4 difference is why the selected measure must be explicit in every commercial decision.
Margin is useful when profitability is measured against revenue. Markup is useful when a business starts from cost and adds a percentage. Neither is universally better: consistency is what prevents mistakes. State the measure, keep tax treatment consistent and use the real purchase cost—including deal discounts, free goods, fees and freight when relevant.