Margin to markup conversion
Convert between margin and markup with one formula. Here's the math, the full conversion chart, and why mixing them up costs real money.
The conversion formula
Markup = Margin ÷ (1 − Margin)
Where both are expressed as decimals. To convert a 40% margin to markup: 0.40 ÷ (1 − 0.40) = 0.40 ÷ 0.60 = 0.667 = 66.7% markup.
Why these two numbers aren't the same
Margin and markup measure the same profit dollars but use different denominators:
- Margin divides profit by selling price
- Markup divides profit by cost
Since selling price is always larger than cost (assuming you're profitable), markup is always a larger percentage than margin for the same product.
The full conversion chart
| Margin % | Markup % | Plain English |
|---|---|---|
| 10% | 11.11% | Tight retail |
| 15% | 17.65% | Grocery / pharmacy |
| 20% | 25.00% | Common retail floor |
| 25% | 33.33% | Standard wholesale |
| 30% | 42.86% | Mid-tier retail |
| 33.33% | 50.00% | One-third profit |
| 40% | 66.67% | Specialty retail |
| 50% | 100.00% | Keystone pricing |
| 60% | 150.00% | Apparel / DTC |
| 66.67% | 200.00% | "Triple keystone" |
| 75% | 300.00% | Software, jewelry |
| 80% | 400.00% | High-end cosmetics |
For an interactive version, see our full margin-to-markup conversion chart with PDF/SVG download.
A worked example
Your supplier says: "We sell to retailers at a 40% markup." You want to know what margin you'll earn if you sell at their suggested retail price.
40% markup as a decimal = 0.40. Margin = 0.40 ÷ (1 + 0.40) = 0.40 ÷ 1.40 = 0.286 = 28.6% margin.
So you'd earn a 28.6% margin if you matched their retail price recommendation.
Why the conversion matters in practice
The most expensive mistake in pricing is assuming markup and margin are the same. If your supplier says "50% markup" and you hear "50% margin," you'll think you're earning more than you actually are. The 33% gap between markup and margin at the 50% level is the difference between a healthy business and a marginal one.
This confusion has a name in the industry: the 50/50 trap. A retailer told to maintain "50% margin" who applies a "50% markup" is structurally undershooting profit by a third on every sale. We wrote about this at length in margin vs markup: the difference, the math, and the $1,000 mistake.
Markup to margin (the reverse)
Margin = Markup ÷ (1 + Markup)
So a 100% markup is 50% margin. A 200% markup is 66.7% margin. A 50% markup is 33.3% margin.
For one-click conversion either direction, use our markup-to-margin tool or margin-to-markup tool.
Frequently asked
Why does my supplier use markup but my accountant uses margin?
Suppliers think in markup because they start from their cost and add a percentage. Accountants think in margin because they start from revenue (the customer-facing number) and measure what percent is profit. Both are correct; the denominators differ.
Which should I use to price my products?
Use markup to set price from cost (working bottom-up). Use margin to evaluate profitability from revenue (working top-down). Many businesses use markup for pricing but report margin to investors and lenders.
Can markup be over 100%?
Absolutely. Many industries routinely use 100-500% markup (apparel, cosmetics, jewelry). Margin caps at 100% (you can never earn more than 100% of revenue), but markup has no upper limit.