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markup vs margin calculator

Markup vs margin calculator

Markup and margin get used interchangeably - and that slip quietly underprices a lot of agency work. Markup sits on top of cost; margin is a slice of the price. Enter a cost and a markup to see the margin it really gives you.

a 50% markup is only a 33% margin
gross margin33%
markup (entered)50%
selling price$1,500
gross profit$500
Healthy margin. A solid markup.
what to do
  • Your 50% markup is really a 33% margin - 17 points below what the markup suggests.
  • Want to actually keep half the price? A 50% margin needs a 100% markup - double your cost, not 50%.
A 50% markup is really a 33% margin - track your real margin live, per client.
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the method

Markup and margin, side by side

margin % = markup / (100 + markup) × 100

markup % = margin / (100 - margin) × 100

Mark up a $1,000 cost by 50% and you sell at $1,500 - but that $500 profit is only 33% of the $1,500 price, not 50%. To actually keep half the price you'd mark up 100% and sell at $2,000.

how to use it

Two inputs, the real margin

  1. Enter your unit or job cost.
  2. Enter the markup you add, as a percentage.
  3. Read the true gross margin, the selling price and the gross profit it produces.
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questions

Frequently asked questions

What's the difference between markup and margin?

Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. The same profit looks like a bigger markup than margin - a 50% markup is only a 33% margin.

How do I convert markup to margin?

margin = markup / (100 + markup), as a percentage. A 50% markup is 50/150 = 33% margin. To go the other way: markup = margin / (100 - margin).

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

No. A 50% markup gives a 33% margin. To actually earn a 50% margin you need a 100% markup - you double the cost.

What markup do I need for a target margin?

markup = margin / (100 - margin). For a 50% margin, mark up 100%; for a 40% margin, mark up about 67%; for a 33% margin, mark up 50%.

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