🏷️ Product Pricing Markup vs. Margin Calculator
Markup and margin both start from your product cost, but they give different prices for the same percentage. Enter your cost and see both methods side by side.
Same percentage, two different prices
Markup adds the percentage to your cost. Margin makes the percentage a slice of the finished price, so the cost has to be divided rather than multiplied:
markup price = cost × (1 + p/100)
margin price = cost / (1 - p/100)
margin from markup = k / (1 + k)
markup from margin = m / (1 - m)At the $40 cost and 25% defaults, markup gives $50.00 and margin gives $53.33 - a $3.33 gap on every unit. The gap widens fast: at 40%, markup prices at $56.00 while margin prices at $66.67. Agree which word you are both using before you accept a supplier's "40%".
Converting between them
| Markup | Same thing as margin |
|---|---|
| 25% | 20.0% |
| 50% | 33.3% |
| 100% | 50.0% |
| 150% | 60.0% |
- Margin can never reach 100%: that would mean a price with no cost in it at all. Enter 100 or more and the margin line returns N/A rather than a number.
- Doubling the cost - keystone pricing - is a 100% markup and a 50% margin. It is a retail habit, not a rule, and it exists to absorb rent, staff and stock that never sells.
- The cost box must hold the full landed cost: item, inbound freight, duty. Marketplace fees come off the price afterwards and shrink the margin you thought you had set.
Frequently asked questions
What is the difference between markup and margin?
Markup measures profit against what you paid; margin measures it against what the customer paid. On a $40 item sold at $50, that is $10 of profit - a 25% markup and a 20% margin, from the same sale.
How do I convert markup to margin?
Divide the markup by one plus the markup. A 50% markup is 0.5 / 1.5, which is a 33.3% margin. Going the other way, divide the margin by one minus the margin: a 40% margin needs a 66.7% markup.
Why does 100% margin not work?
Because the formula divides by one minus the margin, and at 100% that is division by zero. A 100% margin means a price containing no cost, impossible while the item costs you anything.