Markup vs Margin Quick Reference
| Markup % | Gross Margin % | Selling Price (on ₹100 cost) |
|---|
Frequently Asked Questions
Markup is calculated on cost: Markup% = (Profit / Cost) × 100. Margin is calculated on selling price: Margin% = (Profit / Selling Price) × 100. Same profit, different base — 40% markup = 28.57% margin.
Margin = Markup / (1 + Markup). Example: 50% markup → Margin = 0.5 / 1.5 = 33.33%. Or: Markup = Margin / (1 - Margin). Example: 33.33% margin → Markup = 0.3333 / 0.6667 = 50%.
Typical gross margins: Retail (20-50%), Software/SaaS (60-80%), Restaurants (3-9% net, 60-70% gross), Services/Consulting (30-50%), E-commerce (10-30%). Net margin varies widely by industry.
Selling Price = Cost Price × (1 + Markup% / 100). Or: Selling Price = Cost Price / (1 - Margin%). Example with margin: Cost ₹100, target 30% margin → Selling Price = 100 / 0.70 = ₹142.86.
About this calculator
Markup and margin are two ways to describe the same profit, and mixing them up is one of the most expensive mistakes in pricing. Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. A 40% markup is only a 28.57% margin.
This calculator converts between them in three directions: from cost and markup to a selling price, from cost and selling price to markup and margin, and from a selling price and target margin back to the cost you must stay under. A reference table at the bottom lists the matching markup and margin pairs.
How to use it
- In section 1, enter the Cost Price and Markup % to get the selling price and margin.
- In section 2, enter the Cost Price and the Selling Price to get profit, margin and markup.
- In section 3, enter the Selling Price and your Target Margin % to find the maximum cost.
- Use the reference table for quick conversions.
Markup and margin formulas
Markup % = (Price − Cost) ÷ Cost × 100 and Margin % = (Price − Cost) ÷ Price × 100. Convert: Margin = Markup ÷ (100 + Markup) × 100 and Markup = Margin ÷ (100 − Margin) × 100. To price from cost and margin: Price = Cost ÷ (1 − Margin). To price from cost and markup: Price = Cost × (1 + Markup).
Worked example
Cost ₹100, markup 40%
| Selling price | ₹140 |
| Profit | ₹40 |
| Margin | 28.57% |
| Markup | 40% |
For the same ₹140 price, a 50% margin would require a cost of ₹70, and a 50% markup would require a price of ₹150. The two are not the same thing.
Tips and common mistakes
- Markup is on cost, margin is on price. A 50% markup is a 33.3% margin, never 50%.
- If you want a 40% margin, a 40% markup gives you only 28.6%. Use cost ÷ (1 − 0.40) instead.
- Margin is the number that matters for profit. It is the share of every rupee of sales you keep before overheads.
- Do not forget GST. Work out margin on the price excluding tax.
- Discounts hit margin hard. A 10% discount on a 30% margin removes a third of the profit.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit divided by cost. Margin is profit divided by selling price. Margin is always the smaller number.
How do I convert markup to margin?
Divide markup by 100 plus markup. A 25% markup gives 25 ÷ 125 = 20% margin.
How do I price a product for a target margin?
Divide the cost by 1 minus the margin. For 30% margin on a ₹70 cost, the price is ₹100.
What is a good profit margin for retail?
Gross margins of 20 to 50% are common, depending on the category. Groceries run low, jewellery and fashion run high.
Is margin the same as profit?
Margin is profit as a percentage. Profit is the rupee amount.
Why does the reference table not match round numbers?
Because markup and margin are different ratios. 100% markup is 50% margin.