Margin to Markup Converter

What Is the Margin to Markup Converter?

Margin and markup are often confused, but they're mathematically related -- this tool converts between them exactly in either direction.

How to Use This Tool

Pick a direction, enter a percentage, and the equivalent value in the other measure appears instantly.

The Formulas

Worked Example

Why the Two Numbers Differ

Margin and markup describe the same profit, but they divide it by different things. Take a product that costs 60 and sells for 100. Profit is 40. Margin is 40 divided by the price of 100, so 40 percent. Markup is 40 divided by the cost of 60, so 66.67 percent. Nothing about the sale changed; only the denominator did. Because price is always larger than cost when you make a profit, markup is always larger than margin for the same sale.

A Reference Table

These conversions come straight from the formulas above and are useful benchmarks when you are pricing:

Notice how markup accelerates as margin gets closer to 100 percent. A 50 percent margin means you double your cost, which is a 100 percent markup. At 90 percent margin the cost is only a tenth of the price, hence a 900 percent markup.

Using the Converter in Practice

• Choose the direction. Use Margin to Markup when you know the margin your business must earn and need the multiplier to apply to supplier costs. Use Markup to Margin when a supplier, retailer or price list gives you a markup and you want to know the profit share of each sale.
• Type the percentage as a number without the percent sign.
• Read the equivalent figure to two decimal places.

A short worked case: a shop owner needs a 35 percent margin. Converting gives a markup of 0.35 divided by 0.65, or 53.85 percent. On a cost of 40 the price is 40 times 1.5385, about 61.54, and 21.54 profit over 61.54 price confirms the 35 percent margin. If instead the owner applied a 35 percent markup, the price would be 54 and the margin only about 25.9 percent, well short of target.

Input Limits

• In the Margin to Markup direction, the margin must be below 100 percent. The field is limited to 99.99, and a value of 100 or more shows a message, since a 100 percent margin would mean zero cost.
• Negative margins are accepted mathematically and give a negative markup, representing selling below cost. This is mainly useful for analysing losses.
• In the Markup to Margin direction, the markup cannot be negative. Zero markup gives zero margin.
• Very high markups approach, but never reach, a 100 percent margin.

Common Mistakes

• Adding the target margin to the cost as if it were a markup. This underprices the item every time.
• Mixing the two up when reading a contract, an invoice or a marketplace fee schedule. Always check which base the percentage uses.
• Assuming the converted figure includes overhead. Both are ratios of the selling price and cost you supply; operating expenses and tax are outside this conversion.

Because this is a pure formula converter, it does not need your actual cost or price. If you do have them, the Profit Margin and Markup calculators on this site will compute either measure directly from real numbers.

Frequently Asked Questions