Profit
-$9,992.00
Markup (%)
-99.92%
Margin (%)
-124900%
How it works
The Markup vs. Margin Calculator converts between markup percentage (cost-based) and margin percentage (revenue-based) — two ways of expressing profitability that are frequently confused and can lead to costly pricing mistakes if misunderstood.
Markup and margin are not the same thing: a 50% markup (cost × 1.5 = price) gives a 33% margin ((price − cost) / price). Many retailers who quote a "50% margin" actually mean 50% markup — they're achieving a 33% gross margin, not 50%. This calculator converts between the two and prevents the confusion that leads to underpriced products.
How to use it: enter either the cost and markup %, or the cost and margin %, or the cost and selling price — any two values calculate the remaining two. The conversion formulas are displayed alongside the results.
Conversion formulas: - Margin = Markup / (1 + Markup) — e.g., 50% markup → 33.3% margin - Markup = Margin / (1 − Margin) — e.g., 40% margin → 66.7% markup - Selling price = Cost × (1 + Markup %) = Cost / (1 − Margin %)
Retail pricing: clothing retailers typically target 50–60% gross margin. Restaurants target 60–70% food cost margin (30–40% cost ratio). Software companies often run 70–90% gross margins. The calculator includes an industry preset selector for quick benchmarking.
Chain pricing: a wholesale product at $20 with a distributor taking 25% margin and a retailer taking 50% margin arrives at a shelf price of $53.33. The calculator models multi-tier pricing chains.
Privacy: pricing calculations run in the browser.
Frequently Asked Questions
- Both express the relationship between cost and price as a percentage, but the denominators differ. Markup divides profit by cost; margin divides profit by price. A salesperson saying 'I marked it up 100%' (100% markup, 50% margin) and an accountant saying 'the margin is 50%' are describing the same transaction correctly in their respective framings. The confusion arises when the two terms are used interchangeably.
- Markups vary dramatically by industry: clothing/apparel: 100–200% (50–67% margin), jewelry: 100–400%, furniture: 100–300%, electronics: 10–30% (9–23% margin), groceries: 15–25% (13–20% margin), restaurant food cost: 25–35% (66–75% margin on food). Higher markup businesses typically have higher returns, waste, or customer service costs.
- Use: Markup = Margin / (1 − Margin) = 0.40 / (1 − 0.40) = 0.40 / 0.60 = 66.7%. Apply a 66.7% markup to your cost. Example: $60 cost × 1.667 = $100 selling price. Check: ($100 − $60) / $100 = 40% margin. ✓
- Cost-plus pricing (add a fixed markup to cost) is simple to apply but can underprice or overprice relative to market. Value-based pricing (set price based on perceived value, then calculate resulting margin) often produces higher margins but requires market research. Use this tool to verify that any pricing strategy achieves the target gross margin needed to cover operating expenses and generate profit.