How do I convert markup to margin?

Divide the markup by one plus the markup. A 100% markup is 1 ÷ 2, a 50% margin.

How do I price for a target margin?

Divide the cost by one minus the margin. For a 60% margin on a $22.60 cost, $22.60 ÷ 0.40 gives a price of $56.50.

Why is markup always the bigger number?

Both divide the same profit, but markup divides it by cost and margin by price. Price is the larger of the two whenever there is a profit, so the margin percentage is smaller.

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Markup

Markup is how much you add to a product's cost to set its price, expressed as a percentage of the cost. Margin describes the same gap as a percentage of the price.

Updated 8 October 2026

Formula: markup = (price − cost) ÷ cost

Margin · profit ÷ price

66.8%

Profit $45.40

Price $68.00

Markup · profit ÷ cost

200.9%

Profit $45.40

Cost $22.60

The same $45.40 of profit, measured against two different things. Margin compares it with the price; markup compares it with the cost.

Worked example

A throw costs $22.60 and sells for $68.00.

($68.00 − $22.60) ÷ $22.60 = 200.9% markup

The same sale has a gross margin of 66.8%.

Converting

margin = markup ÷ (1 + markup)

markup = margin ÷ (1 − margin)

Markup	Margin
25%	20.0%
50%	33.3%
100%	50.0%
150%	60.0%
200%	66.7%
300%	75.0%

Which to use

Use markup when you are setting a price from a cost, which is how suppliers and wholesalers usually talk. Use margin when you are judging a product against the costs of selling it, since those costs are paid out of the price. Say which one you mean: “a 50% uplift” has two different answers.

When the cost moves

A markup rule only protects you if the cost behind it is current. If a supplier raises a price by 8% and the cost on file stays the same, the markup you think you have is no longer the one you get. A dated cost history shows when each cost changed.

Questions

How do I convert markup to margin?: Divide the markup by one plus the markup. A 100% markup is 1 ÷ 2, a 50% margin.
How do I price for a target margin?: Divide the cost by one minus the margin. For a 60% margin on a $22.60 cost, $22.60 ÷ 0.40 gives a price of $56.50.
Why is markup always the bigger number?: Both divide the same profit, but markup divides it by cost and margin by price. Price is the larger of the two whenever there is a profit, so the margin percentage is smaller.

Glossary
Gross margin
Gross margin is gross profit as a percentage of revenue. The formula, a worked example, how it differs from markup, and why a missing cost inflates it.
Glossary
Break-even price
The break-even price is the lowest price at which a sale covers its own costs. The formula with percentage fees included, and a worked example.
Glossary
Unit cost
Unit cost is what one unit of a product costs you to buy or make. How to calculate it for bought and made goods, and what belongs in it.

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