Markup vs Margin Calculator
Convert markup to margin (and back) instantly — the #1 pricing confusion, solved in both directions from whichever numbers you have.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
Markup and margin measure the same dollar of profit against two different bases — markup against your cost, margin against your price — and confusing them is the single most common pricing mistake in small business. A 50% markup is not a 50% margin; it is a 33.3% margin, and pricing to the wrong one quietly gives away profit on every sale. This converter takes whichever numbers you have (cost and price, a margin, or a markup) and fills in everything else, both directions.
The formulas
- Margin (profit as a % of PRICE)
- (price − cost) ÷ priceMargin can never reach 100% — the profit can never exceed the price it is part of.
- Markup (profit as a % of COST)
- (price − cost) ÷ costMarkup can exceed 100% — keystone pricing (2× cost) is exactly a 100% markup.
- Convert markup → margin
- margin = markup ÷ (1 + markup)
- Convert margin → markup
- markup = margin ÷ (1 − margin)Undefined at 100% margin — which is why a 100% margin does not exist.
- Price from a target
- from margin: price = cost ÷ (1 − margin); from markup: price = cost × (1 + markup)
Worked example
- Say an item costs you $20 and you sell it for $30 — $10 of profit per unit.
- Margin = $10 ÷ $30 = 33.3%: profit measured against the PRICE.
- Markup = $10 ÷ $20 = 50%: the same profit measured against the COST.
- The conversions agree both ways: 50% markup ÷ (1 + 0.50) = 33.3% margin, and 33.3% margin ÷ (1 − 0.333) = 50% markup.
- For reference, keystone pricing — doubling your cost, $20 → $40 — is a 100% markup but only a 50% margin. The two scales are different everywhere except zero.
Rates, benchmarks & sources
- margin = markup ÷ (1 + markup); markup = margin ÷ (1 − margin); identical profit, different base — Standard pricing algebra (definitional, no external constants)
- Keystone pricing = 2× cost = 100% markup = 50% margin — Retail convention
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- The converter is pure arithmetic on one unit — it does not tell you whether the resulting price is competitive or whether the margin covers your overhead.
- Margin here means gross margin on a single item; your business-wide net margin will be lower once operating expenses, fees, and taxes are subtracted.
- It assumes cost is your full landed unit cost; if your cost figure omits freight, packaging, or direct labor, both the margin and markup shown are overstated.
Frequently asked questions
Is a 50% markup the same as a 50% margin?
No — and this is exactly the confusion the tool exists to fix. A 50% markup on a $20 cost gives a $30 price and $10 of profit, which is only a 33.3% margin. To earn a true 50% margin on that $20 cost, you must price at $40, which is a 100% markup. Same word "fifty," ten dollars of difference per unit.
Why can markup exceed 100% but margin cannot?
Because of what each one divides by. Markup divides profit by cost, and profit can be any multiple of cost — a $20 item sold for $60 has a 200% markup. Margin divides profit by price, and profit is always a slice of the price, so it can approach but never reach 100%. That is also why the margin → markup conversion blows up as margin nears 100%.
What is keystone pricing?
Keystone is the retail convention of doubling your cost to set the price: a $20 cost becomes a $40 price. In converter terms that is a 100% markup and a 50% margin — the one anchor point worth memorizing, because it instantly reminds you the two scales differ. Retail buyers commonly expect roughly keystone economics when they buy wholesale.
Which number should I use to run my business — markup or margin?
Margin is usually the more useful lens for health, because your financial statements, break-even math, and profitability targets are all expressed against revenue. Markup is the more convenient lens for setting prices from a cost sheet. Many owners set prices with markup and report with margin — which is fine as long as the conversion between them is done explicitly, not assumed.
How do I convert a markup to a margin without the calculator?
Divide the markup by one plus the markup: a 50% markup is 0.50 ÷ 1.50 = 33.3% margin, and a 100% markup is 1.00 ÷ 2.00 = 50% margin. Going the other way, divide the margin by one minus the margin: a 40% margin is 0.40 ÷ 0.60 = 66.7% markup. The reference chart below the tool lists the common pairs from 10% to 200% markup.