Margin vs markup calculator — convert either direction
Convert gross margin to markup and back, in either direction. Includes the price and cost pair, the conversion table, and the cost of confusing the two.
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Short answer
Margin and markup measure the same profit against different bases: margin divides gross profit by the selling price, markup divides it by cost. Convert with markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup). A 35% margin equals a 53.8% markup, which on a $78.00 cost is a $120.00 price.
Margin and markup describe the same gross profit against two different denominators, and mixing them up is the most expensive arithmetic mistake in a price list. This margin vs markup calculator converts in both directions and shows what the confusion costs per unit.
Enter a cost and price pair, or a margin percentage, or a markup percentage. You get the other two figures, the resulting price, gross profit per unit, and a side-by-side of the correct price against the price you would get by adding the margin percentage to cost.
Your numbers
What do you know?
$
Landed or standard cost — whichever basis your price list is built on. Include inbound freight and duty.
$
List price before discounts, outbound freight and tax.
units
Used only to annualise gross profit and the cost of the conversion error.
Result
Gross margin
35.0%
$78.00 cost → $120.00 price · $42.00 gross profit per unit
Gross margin35.0%
Markup on cost53.8%
Selling price$120.00
Gross profit per unit$42.00
Cost-plus multiplier1.5385×
Gross profit at 4,200 units$176,400
What happens if the margin percentage is added to cost instead of divided into price.
Pricing method
Price
Margin
Profit/unit
Correct: cost ÷ (1 − 35.0%)
$120.00
35.0%
$42.00
Error: cost × (1 + 35.0%)
$105.30
25.9%
$27.30
Difference
$14.70
9.1 pts
$61,740 a year
gross profit = $120.00 − $78.00 = $42.00
margin = $42.00 ÷ $120.00 = 35.0%
markup = $42.00 ÷ $78.00 = 53.8%
A 35.0% margin needs a 53.8% markup, 18.8 points apart. Add 35.0% to cost by mistake and the price is $105.30 instead of $120.00 — 25.9% realised margin and $14.70 of profit lost per unit.
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Gross profit ÷ selling price, as a decimal. Also called gross margin or margin on sales.
Markup
Gross profit ÷ unit cost, as a decimal. Also called markup on cost or cost-plus percentage.
Cost
Unit cost of the item — landed cost or standard cost, whichever your price list is built on.
Price
Selling price before discounts, freight and tax.
Markup is always the larger number, and the gap widens fast: 10% margin is an 11.1% markup, 50% margin is a 100% markup, 75% margin is a 300% markup. Margin can never reach 100% because profit cannot exceed price. Markup has no ceiling at all.
Worked example
Unit cost
$78.00
Selling price
$120.00
Result
35.0% gross margin = 53.8% markup on cost
$120.00 − $78.00 = $42.00 of gross profit. Divide by the $120.00 price and margin is 35.0%. Divide the same $42.00 by the $78.00 cost and markup is 53.8%. Add 35% to cost instead and the price comes out at $105.30, a margin of only 25.9% — $14.70 per unit gone on every line that carries the error.
Margin to markup conversion table
The reference values people look up. Price column assumes a $100.00 unit cost, so it doubles as a cost-plus multiplier: a 40% margin means multiply cost by 1.667.
Gross margin
Equivalent markup
Price on $100 cost
5%
5.3%
$105.26
10%
11.1%
$111.11
15%
17.6%
$117.65
20%
25.0%
$125.00
25%
33.3%
$133.33
30%
42.9%
$142.86
33.3%
50.0%
$150.00
35%
53.8%
$153.85
40%
66.7%
$166.67
45%
81.8%
$181.82
50%
100.0%
$200.00
55%
122.2%
$222.22
60%
150.0%
$250.00
66.7%
200.0%
$300.00
70%
233.3%
$333.33
75%
300.0%
$400.00
markup = margin ÷ (1 − margin). Rounded to one decimal.
Markup to margin conversion table
Markup on cost
Resulting margin
Gross profit on $100 cost
10%
9.1%
$10.00
15%
13.0%
$15.00
20%
16.7%
$20.00
25%
20.0%
$25.00
30%
23.1%
$30.00
40%
28.6%
$40.00
50%
33.3%
$50.00
60%
37.5%
$60.00
75%
42.9%
$75.00
100%
50.0%
$100.00
150%
60.0%
$150.00
200%
66.7%
$200.00
margin = markup ÷ (1 + markup).
Margin vs markup in your ERP pricing fields
Every ERP has a field that derives price from cost, and the label rarely says which basis it uses. NetSuite item pricing offers a markup/markdown against a base price; many distribution systems hold a "margin %" on the price plan that is actually applied as a cost multiplier. Get the basis wrong once and the error repeats on every line, forever, silently.
Test one item before trusting the field. Set a known cost and target, save, and check the price the system produces against the table above.
Name the field in the sales tool the same way. If CRM shows "margin" and ERP computes markup, quotes and invoices will disagree by the gap in the table.
Watch the direction of rounding. A price rounded down to a charm point (99.95 from 100.00) shaves real margin on low-margin lines — check the effect with the gross margin calculator.
Discounts compound off price, not cost. A 10% discount on a 35% margin item leaves 27.8% margin, not 25%. Model stacked discounts in the discount cascade calculator.
Which one should you use?
Use margin for reporting and use markup for pricing. Margin is what the P&L, the board pack and every finance benchmark are stated in, so it is the number to compare against. Markup is the operator's multiplier — it is what you apply to a landed cost to build a price list.
The trap is reporting in one and pricing in the other without a documented conversion. In ERPray you can ask "gross margin percentage by item class for last quarter, and the markup that implies" and see the query behind both figures, so the basis is never in doubt.
Frequently asked questions
What is the difference between margin and markup?
Both measure the same gross profit, but against different bases. Margin divides gross profit by the selling price; markup divides it by cost. On a $78 cost sold at $120, the $42 profit is a 35% margin and a 53.8% markup. Markup is always the higher of the two.
How do you convert margin to markup?
Divide the margin by one minus the margin. A 30% margin becomes 0.30 ÷ 0.70 = 0.429, or a 42.9% markup. Going the other way, divide the markup by one plus the markup: a 50% markup is 0.50 ÷ 1.50 = 33.3% margin.
What markup gives a 40% margin?
66.7%. Divide 0.40 by 0.60 to get 0.667, so multiply cost by 1.667. On a $100 unit cost that is a $166.67 price, giving $66.67 of gross profit on $166.67 of revenue — exactly 40%. Adding 40% to cost instead would yield only a 28.6% margin.
Why is my margin lower than the markup I set?
Because they are measured against different denominators, and the same profit is a smaller share of the larger number. A 25% markup is a 20% margin, a 50% markup is a 33.3% margin. If the gap looks bigger than the conversion predicts, something else is eating price — discounts, freight, or rebates.
Can margin be more than 100%?
No. Margin is gross profit as a share of selling price, and profit cannot exceed the price, so margin tops out just below 100% as cost approaches zero. Markup has no upper limit — a $10 item sold for $100 is a 900% markup and a 90% margin.
Should freight be in cost when calculating margin?
Include inbound freight and duty, because they are part of what the unit cost you to own. Outbound freight is usually a selling cost and sits below gross profit. Whichever convention you pick, apply it to every item — a mixed basis makes item margins non-comparable.
This calculator needs you to find the inputs first. ERPray pulls them from your own ERP account and computes the answer live — with the exact query shown so you can check it.