Markup vs. Margin: The Difference, With a Conversion Chart

Updated September 2026 · 7 min read

Short answer: Markup is your profit as a percentage of cost. Margin is your profit as a percentage of the selling price. A 100% markup equals a 50% margin, so the same dollar profit always looks like a bigger number as a markup than as a margin.

Mixing these up is one of the most common pricing mistakes in retail and wholesale. This guide explains both, gives you the formulas, and includes a markup vs margin chart you can use to convert between them in seconds.

What’s the difference between markup and margin?

Both start with the same dollar profit (called gross profit): selling price minus cost. The only difference is what you divide by.

A quick example

You buy a scarf for $10 and sell it for $25. Your gross profit is $15.

• Markup: $15 ÷ $10 = 150%
• Margin: $15 ÷ $25 = 60%

Same scarf, same $15. Two very different-looking percentages. That’s why you always need to know which one someone means.

	Markup	Margin
Based on	Cost	Selling price
Formula	Profit ÷ cost	Profit ÷ price
Can it go above 100%?	Yes	No (as long as cost is above zero)
Who uses it most	Buyers and pricing on the shop floor	Accountants, lenders, financial reports
Best for	Setting a price from cost	Judging profitability

Markup vs margin chart

Use this chart to convert markup to margin. The last column shows the selling price for an item that costs $10.

Markup	Equals margin of	Price if cost is $10
10%	9.1%	$11.00
20%	16.7%	$12.00
25%	20%	$12.50
30%	23.1%	$13.00
40%	28.6%	$14.00
50%	33.3%	$15.00
60%	37.5%	$16.00
75%	42.9%	$17.50
100%	50%	$20.00
150%	60%	$25.00
200%	66.7%	$30.00
300%	75%	$40.00

And going the other way, here’s margin to markup:

Target margin	Required markup	Price if cost is $10
10%	11.1%	$11.11
20%	25%	$12.50
25%	33.3%	$13.33
30%	42.9%	$14.29
40%	66.7%	$16.67
50%	100%	$20.00
60%	150%	$25.00
70%	233.3%	$33.33

How do you convert markup to margin (and back)?

You don’t need the chart if you have a calculator. Use these formulas with percentages written as decimals (for example, 40% = 0.40).

How to set a price from a target margin

This is the one people get wrong most often. If you want a 40% margin on a $10 item, the price is not $14. That’s a 40% markup, which only gives you a 28.6% margin.

How to set a price from a target markup

Why the difference matters in wholesale

When you talk to suppliers

Brands often describe their pricing in terms of the retailer’s margin (“our wholesale price gives you a 50% margin”). Others say they price at “keystone,” meaning retail is double wholesale. Both mean the same thing. Read more in keystone pricing explained.

When you plan your budget

Your rent, payroll, and other costs are usually tracked as a percentage of sales. That’s a margin view. If you set prices with markup but plan expenses with margin, you can think you’re profitable when you aren’t.

When you set wholesale prices as a brand

If you make products, you’ll use both. You might mark up your cost to get your wholesale price, then make sure retailers still get a healthy margin at your suggested retail price. See how to calculate wholesale price for the full walkthrough.

Worked example: pricing a small wholesale order

Say you run a gift shop and just placed an order with three items. You want a 50% margin on each. Your landed cost includes a share of the shipping. All numbers here are examples.

Item	Landed cost	Price for 50% margin	Markup	Gross profit per unit
Candle	$7.50	$15.00	100%	$7.50
Tea towel	$4.20	$8.40	100%	$4.20
Ceramic dish	$11.00	$22.00	100%	$11.00

Most shops then round prices to something shoppers expect, like $14.99, $8.50, and $22.00. Rounding changes the margin slightly, so recheck it. At $14.99 the candle margin is ($14.99 − $7.50) ÷ $14.99 = about 49.97%, which is close enough to target. At $8.50 the towel margin rises to about 50.6%.

Now say the candle supplier raises the price and your landed cost becomes $8.25. If you keep the $14.99 price, your margin falls to about 45%. To get back to 50%, the formula says $8.25 ÷ 0.50 = $16.50. That’s the kind of quick check that keeps rising costs from quietly eating your profit.

Common markup and margin mistakes

1. Adding the margin percentage to cost. A 40% “margin” added to cost is really a 40% markup, which is only a 28.6% margin.
2. Using the invoice price instead of landed cost. Freight, duties, and payment fees are part of your cost. Leave them out and both numbers look better than they are.
3. Comparing a supplier’s margin to your markup. Make sure both numbers use the same base before you compare them.
4. Forgetting that discounts come off the price. A 20% discount doesn’t cut a 50% margin to 30%. It cuts it to 37.5%, as shown below, and deeper discounts get worse fast.

What’s a good margin to aim for?

It depends heavily on your category, your overhead, and how fast products sell. Many small retailers aim for roughly a 50% margin (a 100% markup) on wholesale goods, but some categories run lower and some higher. For a deeper look, read what is a good profit margin for retail products.

Remember that discounts hit margin hard. If you sell a $20 item that cost you $10 at 20% off, your price drops to $16 and your margin drops from 50% to 37.5%.

FAQ

Is a 50% markup the same as a 50% margin?

No. A 50% markup equals a 33.3% margin. To get a 50% margin, you need a 100% markup.

Which is higher, markup or margin?

For the same product and price, markup is always the higher percentage (as long as you’re making a profit), because cost is smaller than the selling price.

How do I convert margin to markup quickly?

Divide the margin by one minus the margin. For example, a 30% margin is 0.30 ÷ 0.70 = 42.9% markup. Or use the chart above.

Should I use markup or margin to price products?

Either works if you’re consistent. Many retailers set prices with a target margin because it lines up with how they track profit and expenses.