The two formulas
- Margin = (price − cost) ÷ price. It is the share of the price you keep.
- Markup = (price − cost) ÷ cost. It is how much you add on top of cost.
Same dollars of profit, two different bases. A $60 item that costs $40 has $20 of profit: a 33.3% margin and a 50% markup.
The conversion formulas
- Markup to margin: margin = markup ÷ (1 + markup)
- Margin to markup: markup = margin ÷ (1 − margin)
- Price from cost and target margin: price = cost ÷ (1 − margin)
Markup to margin chart
| If you mark up cost by | Your margin is |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 60% | 37.5% |
| 75% | 42.9% |
| 80% | 44.4% |
| 100% | 50.0% |
| 150% | 60.0% |
| 200% | 66.7% |
| 300% | 75.0% |
Margin is always lower than markup. A 100% markup (double the cost) is a 50% margin, never 100%.
Margin to markup chart
| If you want a margin of | Mark up cost by | Or multiply cost by |
|---|---|---|
| 10% | 11.1% | ×1.11 |
| 20% | 25.0% | ×1.25 |
| 25% | 33.3% | ×1.33 |
| 30% | 42.9% | ×1.43 |
| 35% | 53.8% | ×1.54 |
| 40% | 66.7% | ×1.67 |
| 50% | 100.0% | ×2.00 |
| 60% | 150.0% | ×2.50 |
| 70% | 233.3% | ×3.33 |
| 75% | 300.0% | ×4.00 |
The multiplier column is the shortcut. For a 40% margin, multiply cost by 1.67. A $30 cost becomes a $50 price, with $20 of profit, which is 40% of $50.
The mistake this chart prevents
An owner wants a 40% margin and adds 40% to cost. A $30 cost becomes $42, and the margin is $12 ÷ $42 = 28.6%. To get a 40% margin you need a 66.7% markup.
In a spreadsheet
A1: Markup B1: 50%
A2: Margin from markup B2: =B1/(1+B1)
A3: Margin wanted B3: 40%
A4: Markup needed B4: =B3/(1-B3)
A5: Cost B5: 30
A6: Price B6: =B5/(1-B3)
Format the percentage cells as percentages. Rows 1 and 2 convert markup to margin; rows 3 to 6 convert margin to markup and price.
Which one to use
Use margin to judge whether the business works, because it compares to what you keep from each dollar of sales and ties to your profit and loss statement. Use markup if a supplier, a trade price list or your quoting software works from cost. Either way, convert before you compare numbers from two sources.
Math only; no industry benchmark is implied. Your costs, overhead and market decide what margin is right for your business. See also: how to calculate profit margin and markup, gross, operating and net margin explained, and how to price a job and check your margin.
Published by Groundwork Business Advisory. Updated October 27, 2026.