If you want a 30% profit margin, you need a 42.9% markup, not 30%. Mark a product up by 30% and your margin is only 23.1%. Mixing up the two is one of the most common pricing mistakes in small business, and it quietly underprices every sale.
Below is a margin-to-markup conversion chart, the two formulas behind it, and worked examples so you can price with confidence.
Margin vs Markup in One Sentence Each
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price.
Both use the same profit figure; they just divide by different numbers. Because cost is always smaller than price (when you’re making a profit), markup is always the bigger percentage.
Example: you buy an item for $60 and sell it for $100. Profit is $40.
- Markup = $40 ÷ $60 = 66.7%
- Margin = $40 ÷ $100 = 40%
Margin to Markup Conversion Chart
| Desired margin | Markup needed |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25.0% |
| 25% | 33.3% |
| 30% | 42.9% |
| 33.3% | 50.0% |
| 35% | 53.8% |
| 40% | 66.7% |
| 45% | 81.8% |
| 50% | 100% |
| 60% | 150% |
| 70% | 233.3% |
| 75% | 300% |
| 80% | 400% |
Markup to Margin Conversion Chart
| Markup | Resulting margin |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 60% | 37.5% |
| 75% | 42.9% |
| 100% (“keystone”) | 50.0% |
| 150% | 60.0% |
| 200% | 66.7% |
Doubling the cost (a 100% markup) is what retailers call keystone pricing, and it always produces a 50% margin.
The Conversion Formulas
Write both as decimals (30% = 0.30):
- Markup = Margin ÷ (1 − Margin)
A 30% margin needs 0.30 ÷ 0.70 = 0.4286, a 42.9% markup. - Margin = Markup ÷ (1 + Markup)
A 50% markup gives 0.50 ÷ 1.50 = 0.333, a 33.3% margin.
And to go straight from cost to price:
- Price from markup: Price = Cost × (1 + Markup)
- Price from margin: Price = Cost ÷ (1 − Margin)
That second formula is the one most people get wrong. To hit a 40% margin on a $60 item, the price is $60 ÷ 0.60 = $100, not $60 × 1.40 = $84. Pricing at $84 gives a margin of only 28.6%.
Why the Difference Matters
Suppose your accountant says the business needs a 35% gross margin to cover overheads, and you apply a 35% markup to everything instead. Each $100 of cost becomes a $135 price, and your real margin is $35 ÷ $135 = 25.9%. On $500,000 of annual sales, that 9-point gap is roughly $45,000 of profit you thought you’d have but don’t.
The reverse mistake, quoting a margin to a customer or partner when you meant markup, makes your pricing look greedier than it is.
Worked Examples
Retail: a shirt costs $18 wholesale and you want a 55% margin. Price = $18 ÷ (1 − 0.55) = $18 ÷ 0.45 = $40. Check: ($40 − $18) ÷ $40 = 55%. The markup is $22 ÷ $18 = 122%.
Freelance or services: a subcontractor charges you $1,200 and you need a 25% margin on the job. Price = $1,200 ÷ 0.75 = $1,600. The markup is 33.3%.
Reverse check: a supplier offers a product at $45 with a suggested retail price of $75. Margin = $30 ÷ $75 = 40%; markup = $30 ÷ $45 = 66.7%.
Calculating It in Excel or Google Sheets
With cost in A2 and selling price in B2:
- Markup:
=(B2-A2)/A2 - Margin:
=(B2-A2)/B2 - Price for a target margin in C2:
=A2/(1-C2)
Format the results as percentages.
For one-off checks, the Markup vs Margin Calculator takes a cost and a selling price and shows both percentages side by side, in your currency.
Frequently Asked Questions
What markup do I need for a 30% margin?
42.9%. Use Markup = Margin ÷ (1 − Margin): 0.30 ÷ 0.70 = 0.429.
Is a 50% markup the same as a 50% margin?
No. A 50% markup gives a 33.3% margin. To get a 50% margin you need a 100% markup, which means doubling the cost.
Why is markup always higher than margin?
Both use the same profit, but markup divides it by cost and margin divides it by the higher selling price. Dividing the same number by a smaller figure gives a larger percentage.
Can margin be more than 100%?
No. Margin is profit as a share of the price, so it can never exceed 100% (it would reach 100% only if the item cost nothing). Markup has no upper limit.
Check any price in seconds: enter your cost and selling price in the Markup vs Margin Calculator to see both numbers at once.