Margin vs Markup

The denominator is the difference

Margin: (Selling price − Cost) ÷ Selling price × 100.

Markup: (Selling price − Cost) ÷ Cost × 100.

Example: cost 80, selling price 100

Gross profit is 20. Margin is 20 ÷ 100 = 20%. Markup is 20 ÷ 80 = 25%.

Why 50% markup is not 50% margin

With a Cost of 100, a 50% markup produces a Selling price of 150 and Gross profit of 50. Margin is 50 ÷ 150, or approximately 33.333333%.

Convert margin to markup

Using decimal rates, Markup = Margin ÷ (1 − Margin). A 40% margin is approximately 66.666667% markup.

Convert markup to margin

Using decimal rates, Margin = Markup ÷ (1 + Markup). A 50% markup is approximately 33.333333% margin.

Quick conversion examples

Set price from a target margin

Use Selling price = Cost ÷ (1 − Margin). With Cost 10 and a 30% target margin, the exact selling price repeats at approximately 14.285714. Rounding that price changes the actual margin slightly, so the calculator recomputes it.

Set price from markup

Use Selling price = Cost × (1 + Markup). With Cost 80 and 25% markup, Selling price is 100. That transaction has 20% margin.

Zero and negative cases

If Cost is zero, markup is undefined because its denominator is zero. If Selling price is zero, margin is undefined. A selling price below cost creates negative gross profit and negative percentages.

Use the measure that answers the job

Margin expresses gross profit as a share of sales. Markup expresses how much was added relative to cost. This guide does not prescribe a target rate or determine which costs belong in an accounting measure.