Margin and markup use the same profit
Both measure profit, but against different bases. Margin divides profit by the selling price. Markup divides it by the cost. Because the price is larger than the cost, the margin is always the smaller figure.
Margin → markup: m ÷ (1 − m) Markup → margin: k ÷ (1 + k)
m is the margin and k the markup, both as decimals (40% = 0.40).
Example: one sale, both ways
An item costs $60.00 and sells for $100.00. The profit is $40.00.
- Margin: $40.00 ÷ $100.00 = 40%
- Markup: $40.00 ÷ $60.00 = 66.67%
- Check with the formula: 0.40 ÷ (1 − 0.40) = 0.6667, the same markup.
Two quick conversions
A 25% margin is a 33.33% markup. A 50% markup is a 33.33% margin.
Conversion tables
| Markup | Margin |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20% |
| 30% | 23.08% |
| 40% | 28.57% |
| 50% | 33.33% |
| 60% | 37.5% |
| 75% | 42.86% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.67% |
| Margin | Markup |
|---|---|
| 10% | 11.11% |
| 20% | 25% |
| 25% | 33.33% |
| 30% | 42.86% |
| 40% | 66.67% |
| 50% | 100% |
| 60% | 150% |
| 75% | 300% |
| 80% | 400% |
| 90% | 900% |
Questions
Which is bigger, margin or markup?
For any profitable sale, markup is bigger. Both use the same profit, but markup divides by the cost, which is smaller than the price.
Can I add my margin % to the cost to get the price?
No. That gives a lower margin than you wanted. To hit a margin, divide the cost by one minus the margin, or convert the margin to a markup first with this page.
Why does a 100% margin not exist as a markup?
A 100% margin means the cost is zero, and the markup formula divides by the cost. The converter rejects it.
Can the percents be negative?
Yes. Selling below cost gives a negative margin and a negative markup. Enter them with a minus sign.
Where do I price from a cost and a markup?
Use the markup calculator. For a price from a margin, use the gross margin calculator.