A 50% Markup Is Not a 50% Margin - and Minimum Payments Never Pay Off the Card

Three pricing and debt myths debunked with numbers. Margin vs markup, minimum credit card payments and lease vs loan - what the math actually says.

Natalia Skrzek · 13 July 2026

50% markup means 50% margin. Right?

Wrong. A 50% markup on a $100 item means you sell it for $150. Your profit is $50. But your margin - profit divided by revenue - is only 33.3%. The gap between those two numbers has cost small business owners thousands of dollars in mispriced inventory, underestimated costs and razor-thin profits they did not see coming.

That is the first myth. There are two more.

The second: paying the minimum on your credit card is fine as long as you never miss a payment. The math says otherwise. An $8,000 balance at 22% APR with 2% minimum payments takes over 30 years to pay off. Total interest: more than $14,000. You pay nearly twice what you borrowed.

The third: leasing a car is always more expensive than financing. Also wrong - but only under specific conditions.

Three calculators. Three myths. Let us look at the numbers.

Margin and markup are not the same number

Here is the core confusion. Markup adds a percentage on top of cost. Margin measures profit as a share of revenue. Same dollar profit, different denominator, different percentage.

CostMarkup %Selling priceProfitMargin %
$10025%$125$2520.0%
$10050%$150$5033.3%
$100100%$200$10050.0%
$100200%$300$20066.7%

Notice the pattern. A 50% markup gives a 33.3% margin. A 100% markup - doubling the price - gives a 50% margin. They only match at zero.

A coffee shop buys espresso supplies for $1.20 per latte and sells for $4.50. That is a 275% markup but a 73% margin. The markup sounds absurd. The margin sounds reasonable. Both describe the same $3.30 profit.

Margin and Markup Calculator showing 37.5% margin and 60% markup on a $75 cost item sold for $120

The conversion formula is simple: Markup = Margin / (1 - Margin). A 30% margin requires a 42.86% markup. A 40% margin requires a 66.67% markup. Print the table, tape it to your register, and stop guessing.

Minimum payments: the quietest way to lose $14,000

Credit card companies love minimum payments. A 2% minimum on an $8,000 balance is $160 in month one. Sounds manageable. But $147 of that goes to interest at 22% APR. Only $13 chips away at the principal.

Next month, the balance is $7,987. The new minimum: $159.74. Even less goes to principal. The payment shrinks as the balance drops, so the debt stretches across decades.

Extra paymentPayoff timeTotal interestInterest saved
Minimum only31 years$14,490-
+$50/month6 years 2 mo$5,800$8,690
+$100/month3 years 9 mo$3,690$10,800
+$200/month2 years 4 mo$2,270$12,220
+$500/month1 year 2 mo$1,070$13,420

Adding $200 per month turns a 31-year sentence into a 28-month sprint. The interest drops from $14,490 to $2,270. That is $12,220 saved - more than the original balance.

Credit Card Payoff Calculator comparing minimum payments (50 years) vs minimum plus $200 (3 years 3 months)

The $25 floor makes the tail end worse. Once the balance drops below $1,250, the minimum payment locks at $25/month regardless of the percentage. That final stretch can drag on for another year.

Lease vs loan: the answer depends on two rates

The conventional wisdom says buying is always cheaper than leasing. But when the lease rate is lower than the loan rate - which happens regularly with manufacturer-subsidized leases - the math flips.

Take a $40,000 car with 10% down:

  • Lease: 36 months at 4.5%, 50% residual, buyout included
  • Loan: 60 months at 6.9%, 1% origination fee

The lease costs $46,903 total (including the residual buyout). The loan costs $50,321. Lease wins by $3,418.

Lease vs Loan Comparison Calculator showing lease is $3,418 cheaper for a $40,000 car

But if the loan rate drops to 3.5% and the lease rate stays at 4.5%? The loan wins. The crossover point depends on residual value, term length and down payment. There is no universal answer - only your specific numbers.

High-mileage drivers should almost always finance. Lease mileage penalties ($0.15-0.25 per extra mile) can add $3,000-5,000 at turn-in if you exceed the limit by 10,000-15,000 miles over the term.

The one takeaway that matters

All three myths share a root cause: the percentage you see is not the percentage that matters.

A 50% markup is not a 50% margin. A 2% minimum payment is not 2% of your progress toward freedom. And a lower monthly lease payment does not mean leasing costs more overall. The real numbers hide behind the labels. Run them through a calculator before you commit.

Tools discussed in this article

Margin & Markup Calculator - enter cost and selling price to see margin %, markup % and the price multiplier side by side.

Credit Card Payoff Calculator - enter your balance, APR and payment to see how long payoff takes and how much extra payments save.

Lease vs Loan Comparison Calculator - compare lease and loan terms for the same car with a total cost verdict.

More finance tools

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