Convert between profit margin and markup
Margin and markup both describe the same profit, but measure it against different numbers. Margin compares profit to the selling price; markup compares it to the cost. Mixing them up is one of the most common ways service businesses underprice. Pick what you know and the calculator gives you everything else.
Result
- Selling price$150.00
- Cost$100.00
- Profit$50.00
- Margin (profit ÷ price)33.33%
- Markup (profit ÷ cost)50%
A 50% markup is the same as a 33.33% margin.
Formula and assumptions
Gross margin % = (price − cost) ÷ price × 100. Markup % = (price − cost) ÷ cost × 100
- Cost is the full cost of delivering this sale (labour, materials, direct expenses).
- Margin is measured against the selling price; markup is measured against cost.
Worked example
A copywriter's cost to deliver an article is 100 and she sells it for 150.
- Profit: 150 − 100 = 50
- Margin: 50 ÷ 150 = 33.33%
- Markup: 50 ÷ 100 = 50%
The same 50 of profit is a 50% markup but only a 33.33% margin. If she wanted a 50% margin she would need to charge 200.
The example uses round numbers in no particular currency. They are the values the calculator loads with.
What the inputs mean
- Profit
- Selling price minus cost.
- Gross margin
- Profit divided by selling price. It can never reach 100% while there is any cost.
- Markup
- Profit divided by cost. It has no upper limit — a 200% markup triples the cost.
Common mistakes
- Applying a markup percentage when the business target was set as a margin.
- Comparing your margin with a competitor's markup.
- Leaving part of the cost out (your own time, tools) so both figures look better than they are.
Limitations
- Works on one sale or one project at a time; it does not average across a portfolio.
- Margin cannot be calculated when the price is zero, and markup cannot be calculated when the cost is zero.
Results are estimates based on the numbers you enter. They are not tax, legal or accounting advice. Read the disclaimer.
Questions
Which one should I use?
Use whichever your targets and reports are written in, and be consistent. Accountants and financial statements usually talk in margin; many people set prices with markup. The important thing is knowing which one you mean.
How do I convert a markup to a margin?
Margin = markup ÷ (100 + markup) × 100. A 50% markup is 50 ÷ 150 = 33.33% margin. In reverse, markup = margin ÷ (100 − margin) × 100.
Can margin be negative?
Yes. If you sell below cost the profit is negative, so both margin and markup are negative. The calculator flags this as a loss.