What is the difference between margin and markup?

Gross margin (%) = profit / selling price × 100. Markup (%) = profit / cost × 100. For a $10 cost item sold at $15: profit = $5, margin = 33.3%, markup = 50%. Margin is always lower than markup for any profitable item.

How do I convert a markup % to a margin %?

Margin % = markup % / (100 + markup %) × 100. Example: 50% markup → 50/150 × 100 = 33.3% margin.

How do I convert a margin % to a markup %?

Markup % = margin % / (100 − margin %) × 100. Example: 33.3% margin → 33.3/66.7 × 100 ≈ 50% markup.

What happens when price is less than cost?

The tool shows a negative profit, a negative margin, and a negative markup — indicating a loss. This is valid for clearance pricing or loss-leader products.

Why does retail use margin % instead of markup %?

Margin relates profit to revenue, which aligns with how income statements are read. A 40% margin means 40 cents of every dollar in sales is gross profit, making it easy to compare profitability across product lines.

Margin & Markup Calculator

Finance· 38 tools

Free margin and markup calculator. Enter any two of cost, selling price, margin %, or markup % and instantly compute the rest. Gross margin is profit divided by selling price; markup is profit divided by cost — they are different and this tool shows both clearly. Handles edge cases: zero cost, price below cost (negative margin), and more. Fully client-side, no signup.

Gross Margin %

profit ÷ selling price× 100

Relates profit to revenue — used in income statements.

Markup %

profit ÷ cost× 100

Relates profit to cost — used when pricing from cost up.

I know the…

Cost ($)

Selling price ($)

Cost

$10.00

Selling price

$15.00

Profit

$5.00

Gross margin

profit ÷ selling price

33.33%

Markup

profit ÷ cost

50.00%

Disclaimer: For informational purposes only. This is not financial, tax, or legal advice — consult a licensed professional before making decisions.

Frequently Asked Questions

References

Gross Margin — Corporate Finance Institute — Corporate Finance Institute

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Frequently Asked Questions

References and sources

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