Markup, Margin, Cost & Price Converter
Markup and margin are constantly confused, and the confusion costs money. Convert between them on a single item, solve a selling price from a cost or a cost from a price with the totals for a run of units, or work at whole-business scale between revenue, net margin and profit.
Markup and margin side by side
Markup vs Margin — The Key Difference
Markup is calculated on cost. Margin is calculated on revenue. They’re related but not equal. A 25% markup means you add 25% to cost — but the resulting margin is only 20%. This confusion costs business owners real money: if you want a 30% margin but price with a 30% markup, you’re actually getting only 23%.
The relationship: Margin = Markup / (1 + Markup) and Markup = Margin / (1 − Margin)
Margin% = Markup% / (100 + Markup%) × 100
Markup% = Margin% / (100 − Margin%) × 100
Example: Cost $1,000, Markup 25%
Selling Price = $1,250 | Margin = 25/125 × 100 = 20%
Selling price: $500 × 1.40 = $700
Margin: (700-500)/700 = 28.57% — NOT 40%!
To achieve a true 40% margin on $500 cost: sell at $500 / (1-0.40) = $833.33
💡 What This Means for You
The three modes above answer the same question at three scopes: one item, a run of units, and the whole business. Always agree with your team on whether pricing discussions are in “markup” or “margin” terms. A sales team trained to give “20% discount on margin” vs “20% discount on markup” will produce very different outcomes. Use margin % for profitability conversations; use markup % for buyer-facing pricing decisions.
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Know exactly how many units you need to sell to cover all costs.
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