Margin vs Markup Calculator
- Cost
- Profit
Markup = margin ÷ (1 − margin). Margin = markup ÷ (1 + markup).
How the margin vs markup calculation works
Both use the same profit
Profit is price minus cost. Margin divides it by the price; markup divides it by the cost.
Margin to markup: divide by (1 − margin)
A 30% margin is 0.30 ÷ 0.70 = 42.9% markup.
Markup to margin: divide by (1 + markup)
A 50% markup is 0.50 ÷ 1.50 = 33.3% margin.
Check it on a real cost
On a $70 cost, a 42.9% markup gives a $100 price and $30 profit, which is exactly 30% of the price.
Worked example. You want a 30% margin. The markup needed is 30 ÷ 70 = 42.86%. On a $70 cost that sets the price at $100, with $30 profit.
Margin vs Markup FAQ
What is the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. For the same sale, markup is always the bigger number.
How do I convert margin to markup?
Divide the margin by (1 − margin). A 40% margin is 0.40 ÷ 0.60 = 66.7% markup.
How do I convert markup to margin?
Divide the markup by (1 + markup). A 100% markup is 1 ÷ 2 = 50% margin.
Why can't margin be 100% or more?
Margin is profit divided by price, and profit can never exceed the price unless the item cost less than nothing. Markup has no such limit.
What markup do I need for common margins?
Margin to markup chart: 5% margin needs a 5.3% markup, 10% needs 11.1%, 15% needs 17.6%, 20% needs 25%, 25% needs 33.3%, 30% needs 42.9%, 35% needs 53.8%, 40% needs 66.7%, 50% needs 100%, 60% needs 150%, 70% needs 233.3% and 80% needs 400%.
What margin do common markups give?
Markup to margin chart: a 10% markup gives a 9.1% margin, 20% gives 16.7%, 25% gives 20%, 30% gives 23.1%, 40% gives 28.6%, 50% gives 33.3%, 75% gives 42.9%, 100% gives 50%, 150% gives 60% and 200% gives 66.7%.
Why is markup always higher than margin?
Both use the same dollar profit, but markup divides it by the cost and margin divides it by the price. The price is bigger than the cost whenever you make a profit, so the markup percentage comes out higher. The gap grows fast: at a 20% margin the markup is 25%, at 50% it is 100%.
Should I price using margin or markup?
Either works if you use it consistently. Margin is easier to compare with your income statement, which shows profit as a share of sales.