Markup and margin describe the same profit over different denominators, and confusing them is the most expensive arithmetic error in retail. Markup divides profit by cost, so it answers "how much did I add to what I paid". Margin divides profit by price, so it answers "how much of what the customer paid did I keep". A 50% markup is only a 33.3% margin, and the gap widens the higher you go.
The conversions are exact and worth memorising. Margin equals markup divided by one plus markup, and markup equals margin divided by one minus margin. Expressed as prices: to hit a target margin you divide the cost by one minus the margin, whereas to apply a markup you multiply the cost by one plus the markup. Multiplying when you should divide is precisely how a business ends up underpricing by twenty percent without noticing.
This page converts in whichever direction you need. Pick the basis you are working from, enter the cost and the percentage, and it returns the price along with both percentages side by side. Suppliers and distributors typically quote markup while accountants and investors think in margin, so anyone dealing with both ends up doing this conversion constantly.
The formula
cost- What the item costs you
markup %- Profit as a percentage of cost
margin %- Profit as a percentage of the selling price
price- cost × (1 + markup) or cost ÷ (1 − margin)
How to use this calculator
- Enter the unit cost.
- Choose whether you are working from a markup or from a target margin.
- Enter that percentage.
- The gauge shows the resulting margin; the price, markup and profit appear below.
Worked examples
A 50% markup is not a 50% margin
A cost of $60 with a 50% markup sells at $90, giving $30 of profit. As a share of the $90 price that is only 33.3%. Anyone who quoted this as a 50% margin has overstated profitability by 16.7 percentage points.
Pricing to a target margin
To achieve a genuine 50% margin on the same $60 cost you must divide rather than multiply: $60 ÷ 0.5 = $120, which is a 100% markup. The difference between the two prices is $30 per unit, a 33.3% pricing error.
How to read your score
Frequently asked questions
Which is bigger, markup or margin?
Markup is always the larger number for a profitable sale, because it divides by the smaller figure. They converge only at zero profit and diverge without limit as profit rises.
How do I convert a markup to a margin in my head?
Divide the markup by one plus itself. A 25% markup is 0.25 ÷ 1.25 = 20% margin. A 100% markup is 1 ÷ 2 = 50% margin. Doubling the price is exactly a 50% margin, never 100%.
Can margin exceed 100%?
No. Margin is a share of the selling price, so it approaches 100% but cannot reach it while cost is positive. Markup has no upper limit at all.
Which should I use for pricing?
Price from margin if you are managing profitability, since margin is what appears in the accounts. Use markup when a supplier or a category convention is stated that way, then convert to check what it actually leaves you.
Does discounting affect margin more than markup?
It affects the margin far more visibly. A 10% discount off price cuts a 40% margin to about 33.3%, because the discount comes entirely out of profit while the cost stays put.
Markup and margin conversion tables
| Markup | Price multiplier | Equivalent margin | Price when cost is $60 |
|---|---|---|---|
| 10% | 1.10× | 9.1% | $66.00 |
| 20% | 1.20× | 16.7% | $72.00 |
| 25% | 1.25× | 20.0% | $75.00 |
| 33% | 1.33× | 25.0% | $79.98 |
| 50% | 1.50× | 33.3% | $90.00 |
| 75% | 1.75× | 42.9% | $105.00 |
| 100% | 2.00× | 50.0% | $120.00 |
| 150% | 2.50× | 60.0% | $150.00 |
| 200% | 3.00× | 66.7% | $180.00 |
Margin = markup ÷ (1 + markup). A 100% markup is only a 50% margin.
| Margin | Cost divisor | Equivalent markup | Price when cost is $60 |
|---|---|---|---|
| 10% | 0.90 | 11.1% | $66.67 |
| 20% | 0.80 | 25.0% | $75.00 |
| 25% | 0.75 | 33.3% | $80.00 |
| 30% | 0.70 | 42.9% | $85.71 |
| 40% | 0.60 | 66.7% | $100.00 |
| 50% | 0.50 | 100.0% | $120.00 |
| 60% | 0.40 | 150.0% | $150.00 |
| 70% | 0.30 | 233.3% | $200.00 |
| 80% | 0.20 | 400.0% | $300.00 |
Markup = margin ÷ (1 − margin). Divide cost by the divisor to hit the margin exactly.