Markup vs. margin
Both measure profit, but against different numbers. Markup compares profit with your cost; margin compares it with the selling price. Mixing them up is one of the most common pricing mistakes — a business aiming for a 30% margin that adds a 30% markup ends up with only 23% margin.
Price = cost × (1 + markup)
Price = cost ÷ (1 − margin)
Margin = markup ÷ (1 + markup)
Markup to margin conversion table
| Markup | Margin | Cost $100 sells for |
|---|---|---|
| 10% | 9.1% | $110.00 |
| 15% | 13.0% | $115.00 |
| 20% | 16.7% | $120.00 |
| 25% | 20.0% | $125.00 |
| 30% | 23.1% | $130.00 |
| 40% | 28.6% | $140.00 |
| 50% | 33.3% | $150.00 |
| 60% | 37.5% | $160.00 |
| 75% | 42.9% | $175.00 |
| 100% | 50.0% | $200.00 |