Margin vs markup calculator
Same profit, two percentages. Markup is measured against the cost, margin against the price.
Margin and markup from cost and price
Markup is profit as a percentage of the cost. Margin is profit as a percentage of the selling price.
Cost , selling price
Working: (100 − 60) ÷ 100 × 100 = 40%
- Profit
- 40
- Markup
- (100 − 60) ÷ 60 × 100 = 66.6667%
Price for a target margin or markup
Cost , aiming for a
Working: 60 ÷ (1 − 40 ÷ 100) = 100
- Profit
- 40
Convert margin to markup, or back
A
Working: 40 ÷ (100 − 40) × 100 = 66.6667%
The difference
Buy something for 60 and sell it for 100, and the profit is 40. As a share of the cost that's 40 ÷ 60 = 66.67%, the markup. As a share of the price it's 40 ÷ 100 = 40%, the margin. Margin is always the smaller number when there's a profit.
Pricing for a margin
To make a 40% margin on something that costs 60, divide: 60 ÷ (1 − 0.40) = 100. Adding 40% to the cost gives 84, which is only a 28.57% margin. Mixing the two up is the usual pricing mistake.
Converting between them
Markup = margin ÷ (100 − margin) × 100. Margin = markup ÷ (100 + markup) × 100. A 50% margin is a 100% markup, and a 25% markup is a 20% margin.
Limits
A margin can't reach 100% unless the cost is zero, since the cost is part of the price. Markup has no upper limit.