Know the Figures

Margin vs Markup Converter

Convert markup to margin and back, and see the price error the mix-up causes.

Replaces: Pricing cheat-sheets that get it backwards

How to use it

Choose whether you are starting from a markup, a margin or a cost and selling price, and enter it with your unit cost. The calculator converts between margin and markup, gives the price and profit per unit, and shows what happens if the margin you want is added to cost as though it were a markup.

Where the number comes from

  • Margin is profit as a share of the selling price: (price − cost) ÷ price. Markup is the same profit as a share of cost: (price − cost) ÷ cost.
  • From a markup, margin = markup ÷ (1 + markup) and price = cost × (1 + markup).
  • From a margin, markup = margin ÷ (1 − margin) and price = cost ÷ (1 − margin). That division is why margin must stay below 100%.
  • The mistake figure adds the margin to cost as a markup: cost × (1 + margin). Its real margin is margin ÷ (1 + margin), always lower than intended.
  • The table converts common markups to margins and prices them at your unit cost, highlighting the row nearest your own markup.

What goes wrong

The part most calculators leave out.

  • The mix-up is the risk this calculator exists for: a target written as a margin but applied as a markup underprices every unit, and the shortfall grows with the target — 40% applied the wrong way loses 11.4 points of margin.
  • The result is only as good as the unit cost. If cost leaves out freight, payment fees, returns or the labour to sell the unit, both figures overstate what you keep.
  • Margin here is gross margin on one unit. A healthy gross margin can still be a loss once overheads are counted; that needs a full-cost or break-even view.
  • Prices that include sales tax or VAT distort both figures. Enter the price net of tax, or the margin will look larger than it is.
  • Different teams and systems use the words loosely — some call markup “margin”. Check which one a quoted figure is before converting it.

A 40% margin on a unit costing 60

A product costs 60 and you want a 40% margin. Dividing 60 by 0.6 gives a price of 100 — a 66.7% markup on cost, leaving 40 of gross profit per unit. Adding 40% to cost instead gives a price of 84, which is only a 28.6% margin. The table shows the same pattern at every level: a 100% markup, doubling the cost, is a 50% margin.

Questions

What is the difference between margin and markup?
Both measure the same profit. Margin divides it by the selling price; markup divides it by the cost. A unit that costs 60 and sells for 100 has a 40% margin and a 66.7% markup.
How do I convert markup to margin?
Divide the markup by one plus the markup, as decimals. A 50% markup is 0.5 ÷ 1.5 = 33.3% margin.
How do I convert margin to markup?
Divide the margin by one minus the margin. A 40% margin is 0.4 ÷ 0.6 = 66.7% markup. To price from a margin directly, divide the cost by one minus the margin.
Can margin be more than 100%?
No. Margin is profit as a share of price, and profit can never exceed the price unless the cost is negative. Markup has no such limit: a 300% markup is a 75% margin.
Does anything I type get sent anywhere?
No. The whole calculation runs in your browser. Nothing is sent to us or logged, and there is no account to create. Your browser keeps the figures with this tab’s history so that Back and Reload bring them back, and Reset clears them.

Last updated .

Put this calculator on your site

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HTML

The small script resizes the frame as the reader changes inputs. Drop it if your CMS strips scripts — the calculator still works, it will just stay at a fixed height. The calculator is light by default; on a dark site, end the src with ?theme=dark, or ?theme=auto to follow each reader’s device.

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