Guide · Pricing & profit
Markup vs Margin — Percentages Explained
Updated: June 2026
Markup and margin describe the same profit, but they measure it against different bases — cost for one, selling price for the other. Mix them up and you can badly under-price a product while thinking you're comfortably in the black. This page lays out both formulas, shows why markup always looks bigger, and gives you a clean way to convert between them.
Free · No upload · Instant in the browser
The two formulas
Both start from the same profit — selling price minus cost — but divide by a different number:
margin % = (price − cost) ÷ price × 100
Markup answers "how much did I add on top of cost?" Margin answers "what fraction of my selling price is profit?" Same numerator, different denominator — and that single difference is the entire source of the confusion.
A worked example
You buy an item for 60 and sell it for 90. The profit is 30. The markup is 30 ÷ 60 × 100 = 50% — you added half the cost on top. The margin is 30 ÷ 90 × 100 = 33.3% — a third of the sale price is profit. Both describe the very same 30 of profit on the very same item. A 50% markup is a 33.3% margin; they are two views of one fact.
Why markup always looks bigger
Cost is always smaller than the selling price (assuming you're making a profit), so dividing by cost yields a larger percentage than dividing by price. That's why markup figures always exceed margin figures for the same deal. The gap widens as profitability rises: a 100% markup is only a 50% margin, and a 300% markup is a 75% margin. Quoting a markup as if it were a margin flatters the numbers considerably.
Conversion table
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 200% | 66.7% |
To convert in formulas, use decimals: margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin). A 50% markup becomes 0.5 ÷ 1.5 = 0.333, a 33.3% margin.
Which one to use
- Markup is handy when setting a price from a known cost — "add 40% to whatever it costs me".
- Margin is the standard for reporting profitability, because it's measured against revenue.
- Always state which you mean; a "40% margin" and a "40% markup" are very different deals.
- When comparing suppliers or products, convert everything to margin so the bases match.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is the same profit as a percentage of selling price. The different denominators make markup the larger figure.
How do I convert markup to margin?
Use margin = markup ÷ (1 + markup) in decimals. A 50% markup is 0.5 ÷ 1.5 = 0.333, a 33.3% margin.
Which is bigger, markup or margin?
Markup, always, for the same profit — because it divides by the smaller number (cost) rather than the larger one (price).
Can margin ever exceed 100%?
No. Margin is profit as a share of price, so it approaches but never reaches 100%. Markup, dividing by cost, has no such ceiling.