Comprehensive Guide
Learn more in our Personal Finance Guide.
How it works
Margin and markup describe the same profit from two different bases: margin is profit as a percentage of the selling price, while markup is profit as a percentage of the cost. A 50% margin equals a 100% markup — $80 of cost becoming $160 of price carries $80 of profit, which is half the price yet double the cost. This calculator translates in whichever direction you think: enter cost with a target margin and it returns the price that delivers it, or enter cost with a markup and it reveals the margin that markup actually produces. The translation matters because industries speak different dialects — retail buyers plan in margin because rent and overhead scale with sales, while trades and wholesalers quote in markup because their invoices start from cost. Mixing the dialects silently misprices everything: pricing a 40% margin target with a 40% markup delivers just 28.6%. When someone hands you a target number, the first question is which base it lives on — this calculator answers it before the price list goes out.Formula
Margin: price = cost / (1 - margin%/100) | Markup: price = cost x (1 + markup%/100)
Tips
- Memorise the pair 50% margin = 100% markup — it catches most mix-ups instantly.
- Retail thinks in margin (overhead scales with sales); trades think in markup (invoices start at cost).
- A 40% margin goal priced with a 40% markup quietly earns 28.6% instead.
- Margins above 100% are impossible — if the math says otherwise, the number was a markup.
- Publish internal targets in one convention only, and always say which.
Frequently asked questions
What is the difference between margin and markup?
Both measure profit; the base differs. Margin is profit divided by the selling price; markup is profit divided by the cost. A $40 profit on a $160 sale is a 25% margin but a 33.3% markup on the $120 cost.
How do I convert margin to markup?
Markup = margin / (100% - margin). A 40% margin converts to 40/60 = 66.7% markup. Reverse conversion: margin = markup / (100% + markup). The calculator does both directions from a cost figure in one step.
What margin equals a 100% markup?
Exactly 50%. Doubling cost means half the final price is profit. The pairs worth memorising: 20% margin ↔ 25% markup, 33.3% ↔ 50%, 50% ↔ 100%, and 75% ↔ 300%.
Why do retailers use margin instead of markup?
Because a retailer's costs — rent, staffing, utilities — scale with sales revenue, so planning profitability as a share of revenue matches how the bills arrive. Wholesalers and trades quote from cost sheets, which is why their world speaks markup.
How do I calculate a selling price from a target margin?
Divide cost by (1 - margin): an $80 cost at a 40% margin prices at $80 / 0.60 = $133.33. Dividing by the surviving fraction is the step people replace with multiplication — and that substitution is precisely the classic underpricing error.