Markup vs Margin Calculator
Confused about markup vs margin? Convert between them instantly. Enter your cost and either markup or margin to see the relationship and price your products correctly.
Understanding Markup vs Margin
Markup
Percentage added to cost to get selling price. A $100 cost with 50% markup = $150 price.
Margin
Percentage of selling price that is profit. $50 profit on $150 price = 33.3% margin.
Key Insight
50% markup ≠ 50% margin. Markup is always higher than the equivalent margin.
Formulas
Markup Formula:
Markup % = (Price - Cost) / Cost × 100Margin Formula:
Margin % = (Price - Cost) / Price × 100Markup to Margin:
Margin = Markup / (100 + Markup) × 100Margin to Markup:
Markup = Margin / (100 - Margin) × 100Quick Reference: Common Conversions
| Markup % | = | Margin % | Example ($100 cost) |
|---|---|---|---|
| 15% | = | 13% | $115 price |
| 20% | = | 16.7% | $120 price |
| 25% | = | 20% | $125 price |
| 33.3% | = | 25% | $133 price |
| 50% | = | 33.3% | $150 price |
| 75% | = | 42.9% | $175 price |
| 100% | = | 50% | $200 price |
| 150% | = | 60% | $250 price |
| 200% | = | 66.7% | $300 price |
Example: Converting Markup to Margin for SaaS Pricing
A SaaS founder wants to hit a 75% gross margin target. Here's a reference table showing exactly what markup percentage achieves each margin:
| Markup % | Margin % | If Cost is $100 | Selling Price |
|---|---|---|---|
| 20% | 16.7% | $100 | $120 |
| 25% | 20% | $100 | $125 |
| 33% | 25% | $100 | $133 |
| 40% | 28.6% | $100 | $140 |
| 50% | 33.3% | $100 | $150 |
| 100% | 50% | $100 | $200 |
A 40% markup only gives you a 28.6% margin. Many founders assume markup and margin are the same — they're not. If your target gross margin is 75% (the SaaS benchmark), you need a 300% markup on your cost of delivery.
Who This Calculator Is For
SaaS Founders Setting Prices
Reverse-engineer the markup needed to hit your gross margin target and price plans with confidence across tiers.
E-Commerce Operators Calculating Margins
Convert your supplier cost markup into actual margin percentages so your P&L and pricing decisions use the same numbers.
Finance Teams Converting Between Metrics
Reconcile markup-based pricing from sales teams with margin-based targets from finance without confusion or errors.
Frequently Asked Questions
What is the difference between markup and margin?
Markup is the percentage added to the cost to get the selling price (based on cost). Margin is the percentage of the selling price that is profit (based on selling price). For example, a 50% markup results in a 33.3% margin.
How do I convert markup to margin?
To convert markup to margin: Margin = Markup / (100 + Markup) × 100. For example, a 100% markup equals 50% margin: 100 / (100 + 100) × 100 = 50%.
How do I convert margin to markup?
To convert margin to markup: Markup = Margin / (100 - Margin) × 100. For example, a 25% margin equals 33.3% markup: 25 / (100 - 25) × 100 = 33.3%.
Why is 50% markup not the same as 50% margin?
Because they use different bases. 50% markup means you add 50% of cost to cost, so $100 cost becomes $150 price. But the $50 profit is only 33.3% of the $150 selling price, giving you 33.3% margin. Markup uses cost as base; margin uses selling price as base.
What is a good markup or margin for retail?
Retail markup typically ranges from 50-100% (33-50% margin). Grocery operates on 10-30% margins. Luxury goods may have 200-300% markup (66-75% margin). The right markup depends on industry, competition, operating costs, and value proposition.
Should I use markup or margin for pricing?
Use markup when calculating prices from cost (cost × (1 + markup%)). Use margin when analyzing profitability or comparing to industry benchmarks. Most financial reporting uses margin. Most pricing decisions start with markup on cost. For SaaS companies, our SaaS pricing strategy guide covers how to set margins that maximize growth and retention.
What is 25% markup as a margin?
25% markup equals 20% margin. The formula is: Margin = Markup / (1 + Markup). So 0.25 / 1.25 = 0.20, or 20%. This means if you mark up a $100 product by 25% to sell at $125, your profit margin on the sale price is 20% ($25 profit / $125 price).
What is 20% margin as a markup?
20% margin equals 25% markup. The formula is: Markup = Margin / (1 - Margin). So 0.20 / 0.80 = 0.25, or 25%. If you want a 20% profit margin on a $100 cost item, you need to sell it for $125.
What is 40% margin as a markup?
40% margin equals 66.7% markup. Using the formula: 0.40 / (1 - 0.40) = 0.40 / 0.60 = 0.667, or 66.7%. A product that costs $100 needs to sell for $166.67 to achieve a 40% margin.
Track Your Margins Across All Products
Get automated margin tracking, pricing optimization, and profitability insights across your entire product catalog.