Markup vs Margin Calculator
Markup and margin are two ways to describe the same profit but expressed relative to different bases. Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. They are often confused, leading to pricing mistakes that erode profitability. This calculator lets you enter a cost and selling price, or either a markup or margin percentage, and instantly shows you all four related figures so you can verify your pricing is achieving the intended profit.
Markup and margin formulas
Markup = (Price - Cost) / Cost * 100
Margin = (Price - Cost) / Price * 100
Convert markup to margin: Margin = Markup / (1 + Markup)
Convert margin to markup: Markup = Margin / (1 - Margin)
Example: Cost $60, Price $100. Profit = $40. Markup = $40/$60 = 66.67%. Margin = $40/$100 = 40.00%.
Common markup-to-margin conversions
- 25% markup = 20.00% margin
- 50% markup = 33.33% margin
- 100% markup (keystone) = 50.00% margin
- 200% markup = 66.67% margin
- 400% markup = 80.00% margin
Frequently asked questions
What is the difference between markup and margin?
Markup is the percentage added to cost to arrive at the selling price: (Price - Cost) / Cost. Margin (gross margin) is the percentage of the selling price that is profit: (Price - Cost) / Price. The same dollar profit produces a higher markup percentage than margin percentage.
How do I convert markup to margin?
Margin = Markup / (1 + Markup). For example, a 66.7% markup equals a 40% margin. You can also use our calculator to convert instantly by entering your markup percentage.
How do I convert margin to markup?
Markup = Margin / (1 - Margin). A 40% margin equals a 66.7% markup. Enter your margin percentage in the calculator to see the equivalent markup.
Why does confusing markup and margin matter?
If you set prices assuming markup equals margin, you will underprice your products. A 50% markup sounds like a 50% margin, but it is actually only a 33.3% margin. Using the wrong figure in pricing can eliminate profitability.
Which figure should I use in pricing decisions?
Margin is preferred in accounting and financial analysis because it is expressed as a percentage of revenue, which is how income statements are structured. Markup is more intuitive for purchase-price-based pricing. Know both and use the right one for each context.
Official sources
- IRS Publication 334: Tax Guide for Small Business.
- SBA Learning Platform: Business Guide.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.