Percentage Calculator / Markup vs margin
Markup vs Margin
Markup measures profit against cost. Margin measures the same profit against the selling price. Convert between them below, or enter a cost and price to see both at once.
Both numbers from a cost and a price
Markup and margin side by side
Convert one to the other
Markup to margin
Margin to markup
One sale, two percentages
A worked example: an item that costs $40 and sells for $50.
1. Find the profit
50 − 40 = $10
2. Markup divides by cost
10 ÷ 40 × 100 = 25% markup
3. Margin divides by price
10 ÷ 50 × 100 = 20% margin
4. Same $10 either way
Only the base changes, never the profit
This is where pricing goes wrong most often: aiming for a 30% margin and applying a 30% markup leaves you short. A 30% margin needs a 42.86% markup.
Which one to use, and when
Use markup when you are setting a price. You know the cost, you multiply, and you have a price — that is why suppliers, wholesalers and trades quote in markup.
Use margin when you are judging the health of the business. Margin tells you what share of every dollar of revenue you keep, which is the number you compare against rent, wages and advertising. Accountants, investors and P&L statements all speak margin.
Mixing them up quietly costs money. If your target is a 40% margin and you apply a 40% markup, your real margin is only 28.6% — you have given away almost a third of the profit you planned for.
Markup to margin conversion table
Every row is the same sale described two ways.
Margin to markup conversion table
The markup you need to apply to hit a target margin.
Markup and margin questions people ask
What is the difference between markup and margin?
- Both measure the same profit, but against different bases. Markup is profit divided by cost. Margin is profit divided by selling price. A $40 item sold at $50 has a 25% markup and a 20% margin.
Is margin always lower than markup?
- Yes, for any profitable sale. Because the selling price is larger than the cost, dividing by the price always gives a smaller percentage than dividing by the cost.
How do I convert markup to margin?
- Margin = markup ÷ (100 + markup) × 100. A 50% markup is 50 ÷ 150 × 100 = 33.33% margin.
How do I convert margin to markup?
- Markup = margin ÷ (100 − margin) × 100. A 40% margin is 40 ÷ 60 × 100 = 66.67% markup.
Which should I use for pricing?
- Use markup to set a price from a known cost, because it multiplies straight onto cost. Use margin to judge profitability, because it tells you what share of each sale you keep — the number that matters against overheads.
Can markup be over 100%?
- Yes. Markup has no ceiling — a $10 cost sold at $40 is a 300% markup. Margin can never reach 100%, because profit can never exceed the selling price.