Markup vs margin comes down to the denominator. Markup compares the difference between selling price and cost with the cost. Margin compares that same difference with the selling price. A product costing 80 and selling for 100 therefore has a 25% markup and a 20% margin.
Use the free Markup Calculator to enter a cost and markup percentage, then review the selling price and corresponding margin. The five examples below show why the percentages differ and how to convert a margin target into a markup input.
Markup vs margin formulas
| Measure | Formula | Base |
|---|---|---|
| Price less cost | Selling price − cost | A monetary amount |
| Markup percentage | (Selling price − cost) ÷ cost × 100 | Cost |
| Margin percentage | (Selling price − cost) ÷ selling price × 100 | Selling price |
These examples use a consistent product cost and selling price, excluding taxes and additional charges. The resulting difference is not automatically net profit after all business expenses. Choose inputs that match the question you are answering.
1. One amount, two different percentages
An item costs 80 and sells for 100. The difference is 20. Divide 20 by the cost of 80 and multiply by 100: the markup is 25%. Divide 20 by the selling price of 100 and multiply by 100: the margin is 20%.
The monetary amount has not changed. The percentages differ because the comparison base changes. AccountingCoach’s explanation of gross margin and markup illustrates this distinction between cost-based markup and sales-based margin.
When reviewing a quote or spreadsheet, write the label beside the number. An unlabeled “25%” does not tell another person whether you mean a percentage of cost or a percentage of the final price.
2. A 50% markup does not produce a 50% margin
Suppose the cost is 120. A 50% markup adds 60, so the selling price becomes 180. The margin is 60 ÷ 180 × 100, approximately 33.33%.
For a positive cost, this relationship can be written as margin % = markup % ÷ (100 + markup %) × 100. Substituting 50 gives 50 ÷ 150 × 100 = 33.33%.
If you instead wanted a 50% margin on the same cost, the selling price would need to be 240. The difference of 120 would then be half the selling price. That is a 100% markup on cost, showing how far apart the two labels can be.
3. Convert a 30% margin into a markup input
For a cost of 140 and a target margin of 30%, calculate selling price = cost ÷ (1 − margin ÷ 100). The calculation is 140 ÷ 0.70 = 200.
The difference is 60. Relative to cost, the markup is 60 ÷ 140 × 100, approximately 42.857143%. That is the percentage to enter in a markup field when checking this scenario, subject to rounding.
The conversion is markup % = margin % ÷ (100 − margin %) × 100, for a margin below 100% with a positive cost. Entering 30 in the markup field would instead give a selling price of 182 and a margin of approximately 23.08%.
4. Recalculate the margin after a discount
An item costs 60 and has a listed price of 100. Its original margin is 40%. A 10% discount on the listed price reduces the actual selling price to 90. The difference between price and cost is now 30, so the new margin is 30 ÷ 90 × 100 = 33.33%.
You cannot simply subtract ten percentage points from the original margin. The discount percentage uses the old selling price, while the new margin uses the new selling price.
To check an offer, calculate the discounted price with the Percentage Calculator, then recalculate the price-minus-cost amount and the margin. Keep delivery charges, fees and other relevant items separate unless your chosen cost definition includes them.
5. A cost increase changes both percentages
Start with a cost of 80 and a selling price of 100. If cost rises to 85 while the selling price stays at 100, the difference falls from 20 to 15. The new markup is 15 ÷ 85 × 100, approximately 17.65%. The new margin is 15 ÷ 100 × 100 = 15%.
This example shows why an old percentage should not be copied into a new cost scenario without recalculating it. Keep the input date and cost basis clear when comparing calculations from different periods.
Quick markup-to-margin comparison
| Markup on cost | Equivalent margin |
|---|---|
| 20% | 16.67% |
| 25% | 20% |
| 50% | 33.33% |
| 100% | 50% |
The figures are rounded to two decimal places. Use the full calculated value before rounding a final monetary amount. Small differences can appear when an application rounds at each intermediate step.
How to use the Markup Calculator
- Open the Markup Calculator.
- Enter the cost price and markup percentage.
- Select “Calculate” and review the selling price and margin.
- If you started with a margin target, convert it to markup before entering it.
- Check that the inputs use the same currency and cost basis.
For the individual calculation, see our guide to calculating markup percentage. The University of Maine’s pricing guide also discusses costs and the difference between markup on cost and markup on selling price.
Frequently asked questions
Which percentage is larger?
For a positive cost and a selling price above cost, markup percentage is larger than margin percentage because it divides the same difference by a smaller base.
Can margin reach 100% when cost is positive?
Not at a finite positive selling price under this formula. A 100% margin would require zero cost.
Does the calculator include every business expense?
No. It uses the cost you enter. Its displayed price-minus-cost figure should not be treated as net profit after expenses that were not included.
Check the denominator before using a percentage
Markup vs margin is easier to compare when each percentage has a clear label and consistent inputs. Use the free Markup Calculator to verify the arithmetic. These examples explain calculations rather than recommend a price, and the tool does not replace accounting records or professional advice.