Markup Vs Margin
Calculator
Results
- Selling price
- 87
- Gross profit
- 27
- Margin on price (%)
- 31.034482
- Markup on cost (%)
- 45
Results
| Selling price | 87 |
| Gross profit | 27 |
| Margin on price (%) | 31.034482 |
| Markup on cost (%) | 45 |
formula-map diagram
- Selling price
- 87
- Gross profit
- 27
- Margin on price (%)
- 31.034482
- Markup on cost (%)
- 45
Formula breakdown
Formula
Price = Cost × (1 + Markup%); Margin% = (Price − Cost) ÷ Price × 100= 87
Note
This is a simplified model. Results use standard textbook definitions and ignore taxes, seasonality, attribution lag, discounting and accounting policy differences. Use them as an estimate, not as accounting, tax or investment advice.
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See all →Frequently asked questions
What's the difference between markup and margin?+
Markup is the percentage added to cost to set the selling price (markup % = (price - cost) / cost), while margin is the percentage of the selling price that is profit (margin % = (price - cost) / price). They use the same numerator but different denominators, which is why they're never numerically equal except at 0%.
Why do a 50% markup and a 50% margin give different prices?+
A 50% markup on a $10 cost gives a price of $15 (cost x 1.5), while a 50% margin on that same $10 cost requires solving price - 10 = 0.5 x price, which gives a price of $20. Confusing the two is a very common and costly pricing mistake.
How do I convert a markup percentage into a margin percentage?+
Use margin = markup / (1 + markup), both expressed as decimals. For example, a 100% markup converts to a 50% margin, since doubling the cost to set price means half the final price is profit.
Which one, markup or margin, should I use when pricing products?+
Margin is generally more useful for profitability analysis because it directly tells you what percentage of each sales dollar is profit, which is what matters for comparing against overhead and target profitability. Markup is more common in retail and wholesale pricing conversations because it's applied directly to cost.
Can margin ever be higher than 100%?+
No — margin is capped at just under 100% as cost approaches zero, since margin is profit divided by price, and profit can never exceed the price itself in a normal sale. Markup, on the other hand, has no upper limit, since cost can be marked up by any multiple.