A different starting point from setting a price
Setting a price (covered in the companion margin-vs-markup article) starts from a known cost and a target percentage, solving for the selling price. This is the reverse situation: cost and selling price are BOTH already known — perhaps from an existing product line or a completed sale — and the question is what margin and markup percentage that price pair actually represents.
The formulas
Profit = selling price − cost price. Margin % = profit ÷ selling price × 100. Markup % = profit ÷ cost price × 100. Both percentages come from the identical profit figure — they just divide it by a different base (selling price vs cost price), which is exactly why they land on different numbers for the same transaction.
A worked example
A product costing ₹100 sold for ₹150: profit = ₹50. Margin = 50 ÷ 150 × 100 = 33.33%. Markup = 50 ÷ 100 × 100 = 50%. The exact same ₹50 profit on the exact same transaction reports as 33.33% under one convention and 50% under the other — neither number is wrong, they're simply answering "50 as a percentage of what?" with two different denominators.
Why knowing both numbers at once is useful
Having both figures for an existing product lets you compare it consistently against other products or industry benchmarks regardless of which convention those benchmarks use — if an industry report quotes "typical margins" while your internal tracking uses markup, converting your own numbers to margin (or vice versa) lets you make an apples-to-apples comparison instead of accidentally comparing a margin figure to a markup benchmark.
A quick sanity check when reviewing pricing data
Since margin always comes out smaller than markup for the same cost/selling-price pair (dividing the same profit by the larger selling-price base always gives a smaller percentage), any dataset or report where a "margin" figure is reported as larger than the corresponding "markup" figure for the same product likely has the two terms swapped somewhere — a useful red flag to check for when auditing pricing spreadsheets or reports compiled by someone unfamiliar with the distinction.