A 50% markup is not a 50% margin, and mixing the two up quietly eats your profit. This conversion chart turns every markup from 10% to 200% into its exact margin, with both formulas, a reverse chart, and a worked pricing example you can check your own numbers against.
What is the difference between markup and margin?
Markup is profit expressed as a percentage of cost: what you add on top of what an item cost you. Margin is profit expressed as a percentage of selling price: what you keep from every pound of revenue. On the same sale, markup is always the bigger number, because cost is a smaller base than price.
Both describe the same profit in pounds. They just divide it by a different number:
- Markup % = (selling price − cost) ÷ cost × 100. Use it when you know what something cost you and need to set a selling price.
- Margin % = (selling price − cost) ÷ selling price × 100. Use it when you check how profitable a sale was, or compare yourself against industry benchmarks.
Take a product that costs you £100 and sells for £150. Profit is £50. Markup is 50 ÷ 100 × 100 = 50%. Margin is 50 ÷ 150 × 100 = 33.3%. Same £50 profit, two very different percentages. This is exactly why our full guide to profit margin vs markup treats them as separate tools, not synonyms.
How do you convert markup to margin?
Divide the markup by one plus the markup: margin = markup ÷ (1 + markup), with the percentages written as decimals. A 60% markup becomes 0.60 ÷ 1.60 = 37.5% margin. Going the other way, markup = margin ÷ (1 − margin), so a 40% margin needs 0.40 ÷ 0.60 = a 66.7% markup.
Three steps, no calculator needed for the common cases:
- Write the markup as a decimal. 50% markup becomes 0.50.
- Add 1. That gives 1.50.
- Divide the markup by that number: 0.50 ÷ 1.50 = 0.333, or 33.3% margin.
Reversing works the same way. A target of 25% margin needs 0.25 ÷ (1 − 0.25) = 0.25 ÷ 0.75 = 33.3% markup. These are the exact formulas accounting platforms publish, including Xero’s margin vs markup guide, which uses the same decimal-based conversions.
Tip: If you convert numbers daily, LancerBill’s markup calculator does the maths instantly and shows the selling price, profit and margin side by side, so you never have to eyeball the chart.
Markup to margin conversion chart (10% to 200%)
Every row below describes exactly the same price and profit, expressed both ways. The third column shows what an item costing £100 would sell for at each markup, so you can sanity-check the arithmetic: margin is simply profit ÷ selling price.
| Markup on cost | Equivalent margin | £100 cost sells for |
|---|---|---|
| 10% | 9.09% | £110.00 |
| 15% | 13.04% | £115.00 |
| 20% | 16.67% | £120.00 |
| 25% | 20.00% | £125.00 |
| 30% | 23.08% | £130.00 |
| 33.33% | 25.00% | £133.33 |
| 40% | 28.57% | £140.00 |
| 50% | 33.33% | £150.00 |
| 60% | 37.50% | £160.00 |
| 66.67% | 40.00% | £166.67 |
| 75% | 42.86% | £175.00 |
| 80% | 44.44% | £180.00 |
| 100% | 50.00% | £200.00 |
| 125% | 55.56% | £225.00 |
| 150% | 60.00% | £250.00 |
| 175% | 63.64% | £275.00 |
| 200% | 66.67% | £300.00 |
Two rows are worth memorising. A 100% markup equals a 50% margin, which is the classic retail “keystone” price: double the cost, keep half of every sale. And a 50% markup only gets you a 33.3% margin, the single most common version of the mix-up.
Margin to markup conversion chart
Sometimes the number comes to you as a margin. A client says “we need 40% margin on this project”, or your industry benchmark is quoted in margin. The reverse chart tells you which markup actually delivers it.
| Target margin | Markup you need | £100 cost sells for |
|---|---|---|
| 10% | 11.11% | £111.11 |
| 15% | 17.65% | £117.65 |
| 20% | 25.00% | £125.00 |
| 25% | 33.33% | £133.33 |
| 30% | 42.86% | £142.86 |
| 40% | 66.67% | £166.67 |
| 50% | 100.00% | £200.00 |
| 60% | 150.00% | £250.00 |
| 66.67% | 200.00% | £300.00 |
Watch out: margin can never reach 100%, because profit can never exceed the selling price. If someone quotes you a “100% margin”, they almost certainly mean a 100% markup, which is a 50% margin. Markup, by contrast, has no ceiling.
Worked example: pricing a design package at a 60% markup
Say you are a freelance designer subcontracting illustration work for a client project. The illustrator costs you £400, and you decide on a 60% markup.
Step 1: set the price. Selling price = cost × (1 + markup) = £400 × 1.60 = £640.
Step 2: find the profit. Profit = £640 − £400 = £240.
Step 3: check the margin. Margin = £240 ÷ £640 = 0.375 = 37.5%. The chart confirms it: 60% markup gives a 37.50% margin. You can verify this instantly in LancerBill’s profit margin calculator.
Now the mistake that makes this worth learning. If you had treated the 60% markup as a 60% margin, you would have believed you were keeping 60% of every sale. In reality you keep 37.5%, and the gap is expensive. A true 60% margin on that £400 cost would need a selling price of £400 ÷ (1 − 0.60) = £1,000, with £600 profit. By charging £640 you would be leaving £360 of profit on the table on a single project.
Run this check on your own numbers whenever the stakes are high: enter your cost and planned price into LancerBill’s business pricing calculator and confirm the margin matches your target before you quote.
When should you use markup, and when margin?
Use markup when you are setting prices. You start from the cost, which is the number you know first, and add what you need to hit your target. Suppliers, wholesalers and tradespeople think in markup because the whole job is “cost plus”.
Use margin when you are judging performance. Your accounts report gross margin, lenders and investors benchmark on margin, and industry averages, like the ones in our guide to good profit margins by industry, are quoted in margin. Margin answers “how much of every sales pound do I keep”, which is the number that pays your rent.
Price with markup, judge with margin. Never do both jobs with one number.
One practical habit ties them together. Set the price using markup from your known costs, then immediately convert to margin and compare it with your industry’s benchmark. If a competitor’s “40% markup” policy and your “40% margin” target are both floating around the team, you now know exactly how far apart they are: 66.67% markup is what a 40% margin actually requires.
Common markup and margin mistakes
Treating them as interchangeable. A 30% markup is a 23.08% margin, not 30%. If you price with a 30% markup while reporting a 30% margin target, you will miss your target on every single sale, and the shortfall compounds across the year.
Pricing to a margin with markup maths. Want a 50% margin? You need a 100% markup, not a 50% markup. The reverse chart exists precisely because “I want X% margin” is the phrase people say, while “I will add Y% to cost” is the maths they do.
Forgetting the ceiling. Margin stops just under 100%; markup keeps climbing. A 400% markup is perfectly normal in some niches and equals an 80% margin, but a “120% margin” is not a thing.
Tip: If you sell handmade or custom work where costs vary per item, convert each product’s markup to margin once and record both figures on your price list. Our guide to pricing handmade products walks through building that price list step by step.
Key takeaways
- Markup = profit ÷ cost; margin = profit ÷ selling price. Same profit, different percentages.
- Convert markup to margin with: margin = markup ÷ (1 + markup), using decimals.
- Convert margin to markup with: markup = margin ÷ (1 − margin).
- Memorise the anchors: 50% markup = 33.3% margin, 100% markup = 50% margin, 200% markup = 66.7% margin.
- Price with markup (from known costs), judge performance with margin (against benchmarks).
- Margin can never reach 100%; markup has no ceiling.
Frequently asked questions
What is a 50% markup in margin?
A 50% markup equals a 33.3% margin. The maths: 0.50 ÷ (1 + 0.50) = 0.333. On a £100 cost, a 50% markup sets the price at £150, profit is £50, and £50 ÷ £150 = 33.3% margin.
Is a 100% markup the same as a 100% margin?
No. A 100% markup (doubling the cost) gives a 50% margin. A 100% margin is impossible, because profit can never be larger than the selling price itself. If someone quotes a “100% margin”, they almost certainly mean a 100% markup.
Why is margin always lower than markup?
Because margin divides the profit by the larger number (the selling price) while markup divides it by the smaller number (the cost). Since the price is always bigger than the cost when you make a profit, the margin percentage is always the smaller of the two.
What markup do I need for a 30% margin?
You need a 42.86% markup. The formula: markup = 0.30 ÷ (1 − 0.30) = 0.4286. On a £100 cost, that sets the price at £142.86, profit is £42.86, and £42.86 ÷ £142.86 = 30% margin.
Can markup be over 100%?
Yes, markup has no ceiling. A 200% markup means the price is three times the cost and gives a 66.67% margin. Markup of 400% or more is normal in industries with low unit costs, such as software or digital products, where a £10 cost can sell for £50.
Should I price my products using markup or margin?
Use markup to set prices, because you start from your known costs and add the profit you need. Then convert the result to margin and check it against your industry’s benchmarks. This two-step habit keeps your pricing profitable and your reporting honest.
This guide is for general information only and is not financial, tax or legal advice.