Two words for the same profit
Imagine an item that costs you $40 and sells for $60. The profit is $20 — that part is not in dispute. The confusion starts when you turn that $20 into a percentage, because there are two reasonable things to divide it by. Divide by the $40 cost and you get a 50% markup. Divide by the $60 price and you get a 33.3% margin. Same sale, same profit, two different percentages — and pricing off the wrong one is one of the quietest ways to give away money. The fix is simply to look at both together, which is what this calculator does on every result.
The conversion formulas
Margin = Markup ÷ (1 + Markup)
Markup = Margin ÷ (1 − Margin)
Use decimals in both formulas. A 50% markup converts to 0.50 ÷ 1.50 =33.3% margin; running it back, 0.333 ÷ 0.667 =50% markup. A few correct pairs to anchor on: a 20% markup is a 16.7% margin, 50% is 33.3%, 100% is 50%, 150% is 60%, and 200% is 66.7%.
Keep these reference pairs handy — every one of them is exact:
- 20% markup → 16.7% margin
- 50% markup → 33.3% margin
- 100% markup (keystone) → 50% margin
- 150% markup → 60% margin
- 200% markup → 66.7% margin
What makes this calculator different
- Both numbers, every time. Enter one cost and one price and you get the markup and the margin together, so you can never mistake one for the other.
- A built-in conversion table. The calculator shows a markup-to-margin reference table, turning the formulas into a look-up so you don’t have to compute anything by hand.
- The bases made obvious. The breakdown makes it clear that markup is measured against cost and margin against price — the single fact that explains why the two percentages differ.
- Shareable scenarios. Each cost-and-price combination lives in the URL, so you can send a pricing comparison to a colleague or save it for later.
Frequently asked questions
What is the difference between margin and markup?+
Margin and markup describe the same dollar of profit, but they measure it against different bases. Markup is profit divided by cost, while margin is profit divided by the selling price. Because the cost is always smaller than the price, the markup percentage works out larger than the margin for the same sale. A $20 profit on a $60 sale that cost $40 is a 50% markup but only a 33.3% margin — the same profit, two different numbers.
How do I convert markup to margin?+
Use the formula margin = markup ÷ (1 + markup), with both percentages written as decimals. For a 50% markup, that is 0.50 ÷ 1.50 = 0.333, or a 33.3% margin. For a 100% markup it is 1.00 ÷ 2.00 = 0.50, a 50% margin. The "+ 1" in the denominator converts the cost-based markup into a price-based fraction, which is exactly what margin measures. Enter any cost and price above and the calculator shows both at once so you never have to do this by hand.
How do I convert margin to markup?+
Reverse the formula: markup = margin ÷ (1 − margin), again using decimals. A 33.3% margin becomes 0.333 ÷ 0.667 = 0.50, or a 50% markup. A 50% margin becomes 0.50 ÷ 0.50 = 1.00, a 100% markup. The "1 − margin" in the denominator represents the cost as a fraction of price, so dividing profit by it rebases the ratio onto cost. Watch the edge case: as margin approaches 100%, the required markup shoots toward infinity, because you can never make a margin of 100% with a finite price.
Why is markup always higher than margin?+
Both ratios put the same profit on top, but they divide by different denominators. Markup divides by cost; margin divides by the selling price; and the price is always larger than the cost by exactly the amount of profit. Dividing the same numerator by a larger number gives a smaller result, so margin is always the smaller percentage and markup the larger. The only time they meet is at zero — a 0% markup is also a 0% margin, because there is no profit to measure.
What are some common margin and markup conversions?+
A handful of pairs come up so often that they are worth memorizing. A 20% markup equals a 16.7% margin; a 50% markup equals a 33.3% margin; a 100% markup (keystone pricing) equals a 50% margin; a 150% markup equals a 60% margin; and a 200% markup equals a 66.7% margin. Reading them the other way: a 25% margin is a 33.3% markup, a 40% margin is a 66.7% markup, and a 50% margin is a 100% markup. The calculator above reproduces these in its markup-to-margin reference table so you can check any value at a glance.
Disclaimer: This calculator is for educational purposes only. The margin and markup figures it produces are gross — they reflect cost and price alone, before operating costs, overhead, taxes, and other expenses. It is not financial advice.