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Margin vs Markup Converter

Margin and markup measure the same profit on different bases, and swapping them is the most common pricing mistake. This converter turns a profit margin into the equivalent markup (and back) and, if you enter the cost, also shows the selling price. A 40% margin is a 66.67% markup, not 40%.

Margin is measured on the selling price; markup is measured on the cost. That is why a 40% margin is a 66.67% markup, not 40%. Enter a cost (optional) to see the selling price. Use amounts excluding VAT.

Equivalent markup
66.67%

How the result is worked out

Profit margin (on the price)40%
Markup (on the cost)66.67%

Educational estimate, not financial advice. It converts between a product’s margin and markup; it does not include the business’s overheads (rent, salaries, taxes) or VAT.

Margin and markup are different bases

Profit margin measures the profit as a percentage of the selling price (margin = profit ÷ price); markup measures the same profit as a percentage of the cost (markup = profit ÷ cost). Because the price is always higher than the cost, the markup is always larger than the margin. That is why “working at 40%” means different prices depending on whether you mean margin or markup.

From margin to markup

To turn a margin into the equivalent markup, divide the margin by (1 − margin): markup = margin ÷ (1 − margin). A 40% margin gives 0.40 ÷ 0.60 = a 66.67% markup. The higher the margin, the bigger the gap: a 50% margin is already a 100% markup.

From markup to margin

The other way round, divide the markup by (1 + markup): margin = markup ÷ (1 + markup). A 100% markup is 100 ÷ 200 = a 50% margin; a 50% markup is a 33.33% margin. The margin is always smaller than the markup, and never reaches 100%.

From cost to selling price

If you enter the product cost, the converter also shows the selling price and the profit per unit: price = cost × (1 + markup), the same as cost ÷ (1 − margin). With a €60 cost and a 40% margin (66.67% markup), the price is €100 and the profit €40. Leave the cost at zero for a percentage-only conversion.

Worked example

A shop wants a 40% margin. As a markup, that is 0.40 ÷ (1 − 0.40) = 0.40 ÷ 0.60 = 66.67%. If it applied a 40% markup to the cost (instead of 66.67%), it would end up with a margin of only 28.6%, well below what it wanted. On an item costing €60 excluding VAT, a 40% margin gives a €100 price (€40 profit); a 40% markup would give only €84.

Frequently asked questions

What is the difference between margin and markup?
Profit margin is the profit as a percentage of the selling price (profit ÷ price); markup is the profit as a percentage of the cost (profit ÷ cost). For the same profit, the markup is always larger. A 40% margin is a 66.67% markup.
How do you convert margin to markup?
Divide the margin by (1 − margin): markup = margin ÷ (1 − margin). For a 40% margin, the markup is 0.40 ÷ 0.60 = 66.67%. This converter does the maths for you, in both directions.
How do you convert markup to margin?
Divide the markup by (1 + markup): margin = markup ÷ (1 + markup). A 100% markup is a 50% margin. The resulting margin is always smaller than the markup and never reaches 100%.
Why is a 40% margin not a 40% markup?
Because the base is different: margin is measured on the selling price and markup on the cost, which is lower. The same percentage applied to a smaller cost gives a smaller amount, so a 40% margin needs a larger markup (66.67%) to reach the same price.
Does the conversion use amounts with or without VAT?
The conversion between margin and markup is percentages only, so it does not depend on VAT. When you enter a cost to see the selling price, use amounts excluding VAT: VAT is charged to the customer and handed to the State, so it does not enter the margin. For VAT, use the VAT calculator.

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Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: 2026-06-23