Markup vs Margin Calculator

Frequently Asked Questions

What is the difference between markup and margin?

Markup is the percentage added to cost to get the selling price (Markup = Profit ÷ Cost). Margin is the percentage of the selling price that is profit (Margin = Profit ÷ Revenue). A 50% markup equals a 33.3% margin — they always describe the same profit but from different bases.

Why do businesses confuse markup and margin?

Both are expressed as percentages of a profit over a number, so they look similar. The difference is the denominator: markup divides by cost, margin divides by revenue. Using the wrong one when pricing can lead to under-pricing and losses.

How do I convert markup to margin?

Margin = Markup ÷ (1 + Markup). For example, a 40% markup: 0.40 ÷ 1.40 = 28.6% margin. To go the other way: Markup = Margin ÷ (1 − Margin). A 28.6% margin: 0.286 ÷ 0.714 = 40% markup.

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