Markup vs Margin Converter
Convert between markup percentage and margin percentage instantly — and understand why they are not the same number.
Results
Visualization
How It Works
Markup and margin both describe the relationship between cost and selling price, but they use different denominators. Markup divides profit by cost; margin divides profit by selling price. This means the same transaction always has a higher markup percentage than margin percentage, which confuses many sellers — especially when following supplier or industry pricing guidelines that don't specify which metric they mean.
The Formula
Variables
- Markup% — Profit divided by cost, expressed as a percentage
- Margin% — Profit divided by selling price, expressed as a percentage
- Cost — Total per-unit cost before any markup is applied
Worked Example
You buy a product for $20 and sell it for $40. Profit = $20. Markup = $20/$20 = 100%. Margin = $20/$40 = 50%. Same deal — very different percentages. If a supplier says 'price it at 50% margin' and you use 50% markup instead, you'll undercharge by a significant amount.
Practical Tips
- Always ask 'margin or markup?' whenever a pricing rule, category guide, or business partner quotes a percentage — the two are not interchangeable.
- A 50% margin requires a 100% markup — this is the most common source of confusion in retail and ecommerce pricing.
- To hit a specific margin, use the formula: Sell Price = Cost / (1 − Desired Margin%). For a 40% margin on a $15 cost: $15 / 0.60 = $25 sell price.
- Retail and wholesale pricing guides almost always use margin (percentage of sell price); manufacturing and cost-plus formulas typically use markup (percentage of cost).
- Build a quick reference cheat sheet for your most common margin targets and their equivalent markup values so you can price new products instantly.
Frequently Asked Questions
Why do markup and margin give different numbers for the same product?
They use different bases. Markup divides the profit by your cost (the smaller number), which makes the percentage look higher. Margin divides the same profit by the selling price (the larger number), so the percentage is always lower. For a $10 profit on a $20 cost and $30 sell price: markup = 50%, margin = 33.3%.
Which should I use — markup or margin?
Use margin when comparing profitability across products or reporting to investors, because margin is expressed relative to revenue (the number that appears on your income statement). Use markup when calculating sell price from cost, because it's simpler to apply: multiply your cost by (1 + markup%). Many businesses track both.
What markup gives a 50% margin?
A 100% markup gives exactly a 50% margin. This is the 'keystone pricing' formula used in traditional retail. You double your cost to get the sell price, which means your profit equals your cost, which is half of the selling price.
Can margin ever equal markup?
Only when profit is zero — at 0% markup and 0% margin, both are the same (zero). For any positive profit, margin will always be lower than markup because it divides by a larger denominator. The gap between them widens as the percentage increases.
What markup do I need to hit a 40% margin?
Use the formula: Markup% = Margin% / (100 − Margin%). For 40% margin: 40 / (100 − 40) = 40 / 60 = 66.67% markup. So you would multiply your cost by 1.6667 to set a price that gives you a 40% margin on every sale.