Enter cost and selling price to get the markup as a percentage of the cost.

Markup versus margin

Markup expresses profit as a share of cost, which is how retailers and wholesalers usually think about pricing. Because it is based on cost rather than price, markup can comfortably exceed one hundred percent, so a product sold at triple its cost carries a two hundred percent markup.

The relationship between markup and margin trips up many new business owners. A fifty percent markup is only a thirty three percent margin, because the two percentages divide the same profit by cost and by price respectively.

To convert markup to margin, divide the markup by one plus the markup. Knowing both views prevents the common error of setting prices that look profitable as a markup but leave a thin margin.

The formula

Worked example

Cost 40, price 60: profit 20, markup = 20 / 40 = 50%.

How to read your result

Markup is profit as a share of cost, so it can exceed 100%. A 50% markup is not the same as a 50% margin.

Frequently asked questions

How do I convert markup to margin?

margin = markup / (1 + markup). A 50% markup is a 33.3% margin.

Which should I price with?

Retailers often think in markup over cost; finance teams track margin on price.

Can markup be over 100%?

Yes - selling at more than double cost gives a markup above 100%.

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