Markup and margin both describe the gap between what something costs you and what you sell it for — but they use different denominators, so they’re easy to confuse, and mixing them up quietly wrecks your pricing. This calculator keeps them straight: give it any two of cost, selling price, markup % and margin %, and it returns the selling price, profit, markup and margin together.
How it works
The two formulas share a profit figure but divide it differently:
- Markup % = profit ÷ cost × 100
- Margin % = profit ÷ selling price × 100
Pick a mode for what you already know:
| Mode | You enter | It derives |
|---|---|---|
| Cost + selling price | cost, price | profit, markup, margin |
| Cost + markup % | cost, markup | price = cost × (1 + markup/100) |
| Cost + margin % | cost, margin | price = cost ÷ (1 − margin/100) |
A target margin of 100% or more is rejected, because profit can never exceed the price.
Example
A product costs £60 and you apply a 50% markup. Profit = £60 × 0.50 = £30, so the selling price is £90. That same £30 profit on a £90 price is a margin of 30 ÷ 90 = 33.3% — markup and margin are never the same number. If instead you target a 30% margin on the £60 cost, the price is £60 ÷ 0.70 = £85.71.
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The denominator is everything
The reason markup and margin differ is purely which number you divide by:
- Markup denominator = cost. Profit as a share of what you paid.
- Margin denominator = selling price. Profit as a share of what you received.
Same profit, same prices — different numbers. A 50% markup and a 33.3% margin describe identical economics. The danger is applying the wrong number in a formula:
If you want a 33% margin and accidentally set a 33% markup, the margin you get is only 25% — and you’ve underpriced by a meaningful amount on every unit.
This mistake is systematic and compounds quietly over thousands of transactions. It is the most common single cause of pricing-driven profit shortfalls.
Common conversion formulas
| You have | You want | Formula |
|---|---|---|
| Markup % | Margin % | margin = markup ÷ (1 + markup) |
| Margin % | Markup % | markup = margin ÷ (1 − margin) |
| Cost + markup % | Selling price | price = cost × (1 + markup ÷ 100) |
| Cost + margin % | Selling price | price = cost ÷ (1 − margin ÷ 100) |
For example, converting a 40% markup to margin: 0.40 ÷ 1.40 = 28.6% margin. Converting a 28.6% margin back to markup: 0.286 ÷ 0.714 = 40% markup. The calculator performs these conversions automatically.
Industry conventions
Different industries habitually express profitability in different ways:
- Retail and e-commerce typically quote markup multiples (a 2× or 3× keystone markup on wholesale cost).
- Financial reporting and accounting use gross margin, expressed as a percentage of revenue (sales price).
- Manufacturing often uses both: markup for pricing and margin for P&L reporting.
- Wholesale distributors commonly use a “margin” percentage that is actually computed on cost — meaning what they call “30% margin” is actually a 30% markup, a 23% true margin. Confirm which denominator is being used before comparing across businesses or making investment decisions.
Margin and pricing power
Gross margin is the ceiling from which all other costs must be covered before a business turns a profit. A 30% gross margin means every £1.00 of revenue leaves £0.30 to cover operating expenses, staff, marketing, and net profit. Businesses with high fixed costs need higher gross margins to survive at lower sales volumes; high-volume, low-margin businesses need scale to cover fixed costs. This calculator is a starting point — pair it with your actual fixed-cost structure to find the margin that makes your business model viable.