Margin vs Markup Calculator
Most business owners confuse these — it costs them thousands. Learn the real difference.
⚠️ Common Mistake
A 25.00% markup only gives you a 20.00% margin — not 25.00%. The terms are NOT interchangeable.
Used for annual impact calculation below
Gross Margin
20.00%
% of selling price
Markup
25.00%
% of cost price
Annual Impact (1,000 units)
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Frequently Asked Questions
What is the difference between margin and markup?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. A 25% markup only yields a 20% margin — many business owners confuse these and underprice.
How do I convert markup to margin?
Margin = Markup / (1 + Markup). Example: 25% markup = 25/125 = 20% margin.
What markup should I use to achieve a 30% margin?
To achieve a 30% margin, use a 42.86% markup. Formula: Markup = Margin / (1 − Margin) = 0.30 / 0.70 = 42.86%.