Markup vs Margin Calculator

Markup and margin describe the same profit from two angles. Enter a cost and price to see both percentages at once.

Quick answer

Markup is profit divided by cost; margin is profit divided by selling price. An item that costs $30 and sells for $50 makes $20 of profit, which is a 66.7% markup but a 40% gross margin. For a profitable item, margin is always lower than markup, and confusing the two can lead to underpricing.

$
$
Gross margin
40.00%
Gross profit
$20
Markup
66.67%
Selling for $50 with a cost of $30 leaves $20 gross profit. That is a 40.0% margin (profit as a share of the price) and a 66.7% markup (profit as a share of cost). Margin can never reach 100%; markup can.

Inputs are pre-filled with the example used on this page — change any number to see your own result. Built on our profit margin calculator.

Key takeaways

  • Markup = (price − cost) ÷ cost. Margin = (price − cost) ÷ price.
  • A 50% markup gives only a 33.3% margin; a 100% markup gives a 50% margin.
  • To hit a target margin, price = cost ÷ (1 − margin).
Gross margin — Gross profit as a percentage of selling price: (price − cost) ÷ price.

Conversion table

These conversions are exact:

  • 25% markup = 20% margin
  • 50% markup = 33.3% margin
  • 66.7% markup = 40% margin
  • 100% markup = 50% margin
  • 150% markup = 60% margin

The formulas are margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin).

Why the mix-up costs money

Suppose you need a 40% margin to cover overheads but add 40% to cost instead. A $30 item would be priced at $42, giving $12 of profit — only a 28.6% margin. You would fall short of your target on every sale. Pricing for a 40% margin needs $30 ÷ 0.6 = $50.

Which one should you use?

Retailers often talk in markup because they start from cost. Financial statements, investors and lenders use margin because it relates profit to revenue. Pick one, label it clearly, and use the markup calculator when you need to price from cost.

Worked example

Cost $30, price $50: profit = $20. Markup = $20 ÷ $30 = 66.7%. Margin = $20 ÷ $50 = 40%. Check: 0.667 ÷ 1.667 ≈ 0.40.

Methodology and sources

Gross profit = price − cost. Gross margin = gross profit ÷ price. Markup = gross profit ÷ cost. Cost should include everything needed to deliver one unit (product, packaging, inbound shipping) but not overheads.

Sources: Investopedia – Profit margin · Investopedia – Markup

Frequently asked questions

Is markup or margin higher?

For a profitable product, markup is always higher than margin because cost is smaller than price.

What is a 50% markup as a margin?

33.3%. Multiply cost by 1.5 to apply a 50% markup; the profit is one-third of the price.

How do I price for a 30% margin?

Divide cost by 0.7. A $35 cost needs a $50 price for a 30% margin.

What is a good gross margin?

It varies widely by industry. Compare with businesses like yours and make sure the margin covers overheads and profit.

Results are estimates for educational purposes and are not financial advice.

Written and reviewed by Muhammad Asif, founder of CalcPane · Formulas verified by automated tests · Updated