Margin vs markup converter
The formula, a worked example, and the error this particular calculation tends to produce.
How it works
The same percentage means two different prices depending on which base it is measured against. This converts between them and shows the gap in money.
The formula
margin = markup ÷ (1 + markup) markup = margin ÷ (1 − margin)
- Enter your unit cost.
- Enter the percentage you have been quoting.
- Compare the two selling prices and the profit each produces.
Worked example
| Item | Value |
|---|---|
| Cost | ₹1,000.00 |
| 50% as a markup | ₹1,500.00 |
| 50% as a margin | ₹2,000.00 |
| Difference between the two readings | ₹500.00 |
The mistake to avoid
Treating them as interchangeable because the numbers look similar at small percentages. At 10% the gap is about 1%; at 50% it is a third of revenue; above 70% pricing on the wrong one can wipe out the profit entirely.
Questions people ask
What is the difference between margin and markup?
Markup is profit as a share of cost; margin is profit as a share of the selling price. Cost 100 with a 50% markup sells at 150; cost 100 at a 50% margin sells at 200. They agree only at zero, and the gap widens as the percentage rises — at a 70% target the difference is more than double.
Should I apply my margin before or after tax?
Before. Consumption tax is collected on behalf of the government and was never your revenue, so the margin belongs on the tax-exclusive price. Taking the margin on the tax-inclusive figure understates your real margin and underprices the item.