Markup vs Margin: Formula, Difference & Calculator
The difference between margin and markup is the denominator. Margin divides profit by selling price; markup divides the same profit by cost. For any profitable sale, markup is always a higher percentage than margin because cost is smaller than selling price.
Revenue (selling price)
Cost
| Dimension | Margin | Markup |
|---|---|---|
| Denominator | Revenue (selling price) | Cost |
| Always higher? | Lower % for same sale | Higher % for same sale |
| Answers the question | What % of revenue is profit? | How much did you add to cost? |
| Best for | Comparing profitability across products | Setting selling price from cost |
| Formula shortcut | Margin = Markup / (1 + Markup) | Markup = Margin / (1 - Margin) |
| Common mistake | Using markup % as margin % | Confusing markup with margin in pricing |
Margin
Margin = (Revenue − Cost) / Revenue × 100
Margin (also called profit margin) shows what percentage of each dollar of revenue is profit. It answers: out of every dollar the customer pays, how much do you keep?
Revenue (selling price)
$30 / $80 = 37.5%
Markup
Markup = (Revenue − Cost) / Cost × 100
Markup shows the percentage added to cost to reach the selling price. It answers: how much above cost did you charge?
Cost
$30 / $50 = 60%
Margin vs markup calculator
Enter your cost and selling price. The calculator shows profit, margin, and markup at the same time — so you can see exactly how the two percentages differ for your own numbers.
Updated live as you type.
Example with the same numbers
You buy a product for $50 and sell it for $80. Your profit is $30. Margin is 37.5% ($30 ÷ $80). Markup is 60% ($30 ÷ $50). Same profit, different percentages.
Margin vs markup formula
Both formulas start from the same profit (selling price minus cost). The only difference is what you divide that profit by: revenue for margin, cost for markup.
Margin % = (Price − Cost) ÷ Price × 100
Profit as a share of the price the customer pays.
Markup % = (Price − Cost) ÷ Cost × 100
Profit as a share of what the item cost you.
Markup = Margin ÷ (1 − Margin). Margin = Markup ÷ (1 + Markup). Example: a 40% margin equals 40 ÷ (1 − 0.40) = 66.7% markup; a 50% markup equals 50 ÷ (1 + 0.50) = 33.3% margin.
How to calculate margin and markup step by step
Use the same two numbers — your cost and your selling price — for both calculations.
- 1Find your profit
Subtract cost from selling price. If an item costs $50 and sells for $80, profit is $30.
- 2Calculate margin
Divide profit by the selling price, then multiply by 100. $30 ÷ $80 × 100 = 37.5% margin.
- 3Calculate markup
Divide the same profit by the cost, then multiply by 100. $30 ÷ $50 × 100 = 60% markup.
- 4Sense-check the result
Markup is always the larger number, because cost is smaller than price. If your margin comes out higher than your markup, you divided by the wrong figure.
Margin to markup conversion chart
Same sale, two ways of expressing it. Use the left table to turn a target margin into the markup you apply on cost; use the right table to find the true margin hidden inside a markup percentage.
| Margin | Equivalent markup |
|---|---|
| 5% | 5.3% |
| 10% | 11.1% |
| 12% | 13.6% |
| 15% | 17.6% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 33.3% | 50% |
| 35% | 53.8% |
| 40% | 66.7% |
| 45% | 81.8% |
| 50% | 100% |
| 55% | 122.2% |
| 60% | 150% |
| 65% | 185.7% |
| 70% | 233.3% |
| 75% | 300% |
| 80% | 400% |
| Markup | Equivalent margin |
|---|---|
| 5% | 4.8% |
| 10% | 9.1% |
| 15% | 13% |
| 20% | 16.7% |
| 25% | 20% |
| 30% | 23.1% |
| 33% | 24.8% |
| 40% | 28.6% |
| 50% | 33.3% |
| 60% | 37.5% |
| 67% | 40.1% |
| 70% | 41.2% |
| 75% | 42.9% |
| 80% | 44.4% |
| 100% | 50% |
| 125% | 55.6% |
| 150% | 60% |
| 200% | 66.7% |
| 300% | 75% |
Margin vs markup in the real world
The two numbers describe the same sale, but different industries lead with different ones. Confusing them is one of the most expensive pricing mistakes a small business can make.
A boutique buys a jacket for $40 and applies a 50% markup: $40 × 1.50 = $60 retail. But the margin on that sale is only 33.3%, not 50%. Promising a lender a '50% margin' when you really mean a 50% markup overstates profit by a third.
A kitchen targets a 30% food cost — meaning ingredients should be 30% of the menu price, a 70% gross margin. A dish with $4 of ingredients should sell for about $13.33 ($4 ÷ 0.30). Expressed as markup, that is a 233% markup on cost.
An item costs $15 landed and sells for $25, a $10 profit. Your supplier talks in markup (66.7%); your marketplace dashboard reports margin (40%). They are the same sale — knowing both stops you from misreading either report.
When to use Margin
- Comparing profitability of different products or services
- Reporting financial performance to stakeholders
- Benchmarking against industry averages
When to use Markup
- Setting a selling price when you know your cost
- Applying a consistent percentage on top of wholesale cost
- Retail pricing where cost-plus pricing is standard
Calculate both instantly
Profit Margin Calculator
Calculate profit, margin percentage, and pricing health from cost and revenue.
Markup Calculator
Calculate selling price, markup, profit, and margin from cost.
Gross Margin Calculator
Calculate gross profit and gross margin from revenue and COGS.
Selling Price Calculator
Calculate selling price from cost and target profit margin.
Frequently asked questions
What is the difference between markup and margin?+
Both measure profit from the same sale, but they divide by different numbers. Margin divides profit by the selling price; markup divides profit by cost. A $30 profit on an $80 sale is a 37.5% margin (30 ÷ 80) and a 60% markup (30 ÷ 50). Same profit — different denominators, different percentages.
What is markup percentage vs profit margin?+
Markup percentage is profit divided by cost; profit margin is profit divided by selling price. If cost is $50 and price is $80, profit is $30. Markup percentage is 60% ($30 / $50), while profit margin is 37.5% ($30 / $80).
How do I calculate markup vs margin?+
First calculate profit: selling price minus cost. To calculate margin, divide profit by selling price. To calculate markup, divide profit by cost. If you only know one percentage, use Margin = Markup / (1 + Markup) or Markup = Margin / (1 - Margin).
Is a 30% markup the same as a 30% margin?+
No — they describe very different profitability. A 30% markup on a $100 cost gives a $130 selling price, which is only a 23.1% margin. A 30% margin on a $130 sale means $39 profit and a 43% markup on cost. Always confirm which one a supplier, buyer, or industry benchmark is using.
What markup percentage gives a 50% profit margin?+
A 100% markup. If an item costs $50 and you add 100% markup, the selling price is $100 and profit is $50 — exactly 50% of the $100 revenue. Formula: Markup = Margin ÷ (1 − Margin) = 0.50 ÷ 0.50 = 100%.
Why is markup always higher than margin?+
Markup divides by cost, which is smaller than revenue. Dividing by a smaller number produces a larger percentage. The actual profit is the same — only the denominator changes.
How do I convert margin to markup (and back)?+
Margin → Markup: Markup = Margin ÷ (1 − Margin). For example, a 37.5% margin → 0.375 ÷ (1 − 0.375) = 60% markup. Markup → Margin: Margin = Markup ÷ (1 + Markup). For example, 60% markup → 0.60 ÷ 1.60 = 37.5% margin. See the full conversion chart on this page.
Which should I use for pricing?+
Use markup when setting prices from cost — it is simpler to apply a percentage on top of what you paid. Use margin when analyzing profitability, comparing against industry benchmarks, or reporting to lenders and investors. Most retail and wholesale pricing conversations use markup; most financial analysis uses margin.
Is a 50% markup the same as a 50% profit?+
No. A 50% markup on a $20 cost means a $30 selling price and $10 profit — which is only 33.3% margin, not 50%. Markup is always calculated on cost; margin is always calculated on selling price.
Is gross margin the same as margin?+
Gross margin is a specific type of margin that uses COGS (cost of goods sold) instead of total cost. The margin vs markup comparison applies at any cost level — product level, gross level, or net level.
What is the markup vs margin formula?+
Markup formula: Markup % = (Selling Price − Cost) ÷ Cost × 100. Margin formula: Margin % = (Selling Price − Cost) ÷ Selling Price × 100. The only difference is the denominator — cost for markup, selling price for margin. To convert: Markup = Margin ÷ (1 − Margin); Margin = Markup ÷ (1 + Markup).
What is the difference between profit margin and markup?+
Profit margin measures how much of each dollar of revenue you keep as profit: (Revenue − Cost) ÷ Revenue. Markup measures how much you added on top of cost: (Revenue − Cost) ÷ Cost. For the same sale, markup is always a larger number because cost is smaller than revenue. Example: a $30 profit on a $50 cost item sold for $80 = 60% markup but only 37.5% profit margin.
How do I calculate margin vs markup from a percentage I already have?+
If you have a markup percentage and need the margin: Margin = Markup ÷ (1 + Markup). Example: 50% markup → 50 ÷ 150 = 33.3% margin. If you have a margin percentage and need the markup: Markup = Margin ÷ (1 − Margin). Example: 40% margin → 40 ÷ 60 = 66.7% markup. See the full conversion chart on this page.