Convert markup to margin or margin to markup percentages, with the price multiplier and a chart of common values, or get both from cost and selling price.
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Markup to Margin Formula
Markup is measured against cost, while margin is measured against selling price. Since the base is different, markup and margin are never interchangeable on a profitable sale.
Use decimal ratios in formulas without a % sign. In the percentage formulas, enter 50 for 50%; do not convert that input to 0.5.
Core Pricing Relationships
Markup vs. Margin
| Metric | Compared To | Best Used For |
|---|---|---|
| Markup | Cost | Setting a selling price from known cost |
| Margin | Selling price | Measuring gross profitability |
Quick Conversion Table
| Markup | Margin | Selling Price on $100 Cost | Profit |
|---|---|---|---|
| 10% | 9.09% | $110.00 | $10.00 |
| 20% | 16.67% | $120.00 | $20.00 |
| 25% | 20.00% | $125.00 | $25.00 |
| 33.33% | 25.00% | $133.33 | $33.33 |
| 50% | 33.33% | $150.00 | $50.00 |
| 66.67% | 40.00% | $166.67 | $66.67 |
| 100% | 50.00% | $200.00 | $100.00 |
| 150% | 60.00% | $250.00 | $150.00 |
Target Margin to Required Markup
| Target Margin | Required Markup | Selling Price on $100 Cost |
|---|---|---|
| 10% | 11.11% | $111.11 |
| 20% | 25.00% | $125.00 |
| 25% | 33.33% | $133.33 |
| 30% | 42.86% | $142.86 |
| 40% | 66.67% | $166.67 |
| 50% | 100.00% | $200.00 |
| 60% | 150.00% | $250.00 |
| 70% | 233.33% | $333.33 |
Notice how required markup rises sharply as target margin increases. High margin goals require disproportionately larger markups.
How to Use the Calculator
- Choose the value to solve for, enter the displayed values, and select Calculate. Conversion modes accept nonnegative markup or a margin below 100%.
- Optionally enter a positive unit cost in USD in either conversion mode to calculate selling price and gross profit per unit.
- Enter cost and selling price to calculate the resulting markup, margin, and profit.
Common Pricing Mistakes
- Assuming a 50% markup means a 50% margin.
- Using margin targets when the pricing sheet is built on markup, or vice versa.
- Forgetting that margin uses selling price as the denominator, so it will be lower than markup on profitable sales.
- Ignoring negative results, which usually indicate the item is being sold below cost.
FAQ
Why is margin lower than markup?
Because markup is based on cost, while margin is based on the higher selling price. With positive profit, the same profit amount produces a smaller percentage when divided by price.
Can margin ever be higher than markup?
Not on a profitable sale. If the item is sold below cost, both figures can become negative.
What markup is needed for a 40% margin?
66.67%.
What margin does a 100% markup create?
50% margin.
