Margin vs Markup Calculator: See Both From Revenue & Cost
Margin and markup look interchangeable until they aren't — a 25% markup is NOT a 25% margin. This calculator runs the two side by side from the same revenue and cost so you can see the gap, plus the formulas to convert either way.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Margin (% of revenue) | Markup (% of cost) | Gross profit |
|---|---|---|---|
| $100 / $60 (40% margin, 66.7% markup) | 40.00% | 66.67% | $40.00 |
| $75 / $60 (20% margin, 25% markup) | 20.00% | 25.00% | $15.00 |
| $200 / $100 (50% margin, 100% markup) | 50.00% | 100.00% | $100.00 |
How This Calculator Works
Enter revenue and cost. The calculator shows the gross profit in dollars, the margin (profit as a share of revenue), and the markup (profit as a share of cost). The two figures use the same numerator and different denominators, so markup is always larger above zero. Use the conversion formulas at the bottom to translate between them in either direction.
The Formula
Profit Margin and Markup
Markup = (Revenue − Cost) / Cost × 100 — the same profit measured against cost instead of revenue
Worked Example
Cost $60, sell for $100. Profit is $40. Margin = $40 / $100 = 40%. Markup = $40 / $60 = 66.7%. If a supplier quotes 'cost plus 25%', they mean a 25% markup, which gives a 20% margin (not 25%). To hit a 25% margin from a $60 cost, you'd need to mark up by 33.3% — sell for $80, not $75.
Key Insight
The single most expensive accounting mistake in retail and wholesale is mixing the two terms. Suppliers usually quote markup; income statements report margin; pricing software defaults vary. Whenever someone says 'we add a 30% margin to cost', stop and ask which one — at small percentages the difference is invisible, at 40%+ it's the difference between profit and loss. The conversion table in this calculator is the cheapest way to avoid that error: pin the formulas above the cash register, the warehouse PO terminal, and the catalog quote workflow.
Conversion formulas
Margin → Markup: markup = margin / (1 − margin). 20% margin = 25% markup. 50% margin = 100% markup.
Markup → Margin: margin = markup / (1 + markup). 25% markup = 20% margin. 100% markup = 50% margin.
Quick reference table: 10% markup ↔ 9% margin. 25% markup ↔ 20% margin. 50% markup ↔ 33.3% margin. 100% markup ↔ 50% margin. 200% markup ↔ 66.7% margin.
When to use which
Use MARGIN for: income statements, investor reports, KPI dashboards, board decks, year-over-year profitability comparisons.
Use MARKUP for: purchase orders, wholesale negotiations, manufacturing cost-plus contracts, price-setting from a known cost, ERP cost-of-goods workflows.
Common failure mode: a supplier quotes 'cost plus 30%' (markup), the retailer enters it into their POS as '30% margin', and prices end up 9 percentage points below what was intended. Audit your pricing workflow for which one your tools actually use.
Markup ↔ margin conversion
How a given markup translates to a margin (and vice versa). Same profit dollar, different denominator.
| Markup | Margin | Example ($60 cost) |
|---|---|---|
| 10% | 9.1% | $60 → $66, profit $6 |
| 20% | 16.7% | $60 → $72, profit $12 |
| 25% | 20% | $60 → $75, profit $15 |
| 33.3% | 25% | $60 → $80, profit $20 |
| 50% | 33.3% | $60 → $90, profit $30 |
| 66.7% | 40% | $60 → $100, profit $40 |
| 100% | 50% | $60 → $120, profit $60 |
| 200% | 66.7% | $60 → $180, profit $120 |
Read either column to find its mate; the third shows the resulting price and profit on a $60 cost.
Frequently Asked Questions
Why is markup always bigger than margin?
Because markup divides profit by a smaller number. Margin's denominator is the sale price (which includes the profit); markup's is the cost (which excludes it). For any positive profit, the cost is smaller than the price, so the same profit divided by cost gives a bigger percentage.
How do I convert margin to markup?
Markup = margin / (1 − margin). A 20% margin = 0.20 / 0.80 = 25% markup. A 50% margin = 100% markup. The conversion blows up as margin approaches 100%, which makes sense — infinite markup means cost goes to zero.
How do I convert markup to margin?
Margin = markup / (1 + markup). A 100% markup (cost × 2) = 50% margin. A 25% markup = 20% margin. A 50% markup = 33.3% margin.
When should I think in margin vs markup?
Think margin when you're communicating about profitability (investors, board reports, KPIs, P&L). Think markup when you're setting a price from a known cost (purchase orders, wholesale, manufacturing). Most operational pricing software lets you enter either; just don't mix them in the same workflow.
Is a 25% margin and a 25% markup the same?
Only at 0%. Above that they diverge: 25% markup on a $60 cost gives a $75 price (margin 20%); 25% margin from a $60 cost requires an $80 price (markup 33.3%). The difference grows with the percentage.
Why does my POS or e-commerce backend show different numbers?
Many systems silently default to one or the other and label it 'margin'. Test by entering a $100 cost and asking the system to apply '50%'. If the result is $150, the system means markup. If $200, it means margin. This calculator helps you reconcile either.
References & Authoritative Sources
- U.S. Securities and Exchange Commission — Beginners' Guide to Financial Statements · consulted June 1, 2026 · Margin definitions on the income statement.
- U.S. Small Business Administration — Pricing strategy for small businesses · consulted June 1, 2026 · Markup vs margin in pricing decisions.
Related Calculators
Methodology & Review
Margin = (revenue − cost) / revenue × 100. Markup = (revenue − cost) / cost × 100. Both quantify the same gross profit; the difference is the denominator (revenue vs cost). Conversion: margin = markup / (1 + markup); markup = margin / (1 − margin). RELIABILITY: Reliable for any single-product or single-transaction comparison once the cost basis (COGS, full cost, etc.) is fixed. Less reliable when comparing across products that allocate overhead differently — the conversion is correct, but two products with the same 'cost' input may not be apples-to-apples.
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