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Gross Margin vs Markup Percentage Converter

Convert markup on cost to gross margin on price, and the reverse, with dollar examples.

Page updated 2026-09-04.

Gross Margin vs Markup Percentage Converter visual
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Calculator

Default $40.

Default $65.

Calculated Results

Gross margin

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Markup on cost

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Gross profit

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Why $25 of profit is both 38.46% and 62.5%, depending on the base

A $40 unit cost sold at $65 generates $25 in gross profit -- but that $25 is 38.46% margin (profit / selling price) and 62.5% markup (profit / cost) at the same time. Same dollars, two different percentages, because each divides by a different base.

This is the single most common pricing mix-up in retail and wholesale conversations: someone says '60% markup' meaning cost-plus pricing, someone else hears '60% margin' meaning nearly two-thirds of the sale price is profit -- and prices a product 20+ percentage points wrong as a result.

The two numbers converge only at very low percentages and diverge more as they grow: a 100% markup is always exactly 50% margin, but a 200% markup is 66.7% margin, not 100% -- the relationship isn't linear.

The formulas behind both numbers

Margin is on selling price. Markup is on cost. They are not interchangeable labels. Margin % = (price - cost) / price x 100. Markup % = (price - cost) / cost x 100. Both use the same numerator ($25 profit here) but different denominators.

If you know the markup you want and need to find the resulting margin (or vice versa), the two convert directly: margin = markup / (1 + markup), and markup = margin / (1 - margin), both expressed as decimals.

Cost and price are the only two inputs -- there's no separate discount, tax, or fee field, so build those into the cost or price figures before comparing across products.

Where this distinction actually matters

Wholesale and retail pricing conversations use markup and margin almost interchangeably in casual speech but very differently in a spreadsheet -- the Wholesale Pricing & Markup Calculator works specifically from a target markup instead of margin.

For a business-wide view instead of a single SKU, the Gross Profit Margin Calculator applies the same margin definition across total revenue and COGS.

Frequently Asked Questions (FAQ)

Why are margin (38.46%) and markup (62.5%) different numbers for the same $25 profit?

Because margin divides profit by selling price ($25/$65 = 38.46%) while markup divides the same profit by cost ($25/$40 = 62.5%). Same dollar profit, different denominator, different percentage.

If a supplier says they want a 50% markup, what margin does that give me?

50% markup converts to margin / (1 - margin) = 0.5, solving to a 33.3% margin -- not 50%. Use margin = markup / (1 + markup) to convert: 0.5 / 1.5 = 0.333.

Is a 100% markup the same as a 100% margin?

No. A 100% markup means selling at double the cost, which works out to exactly 50% margin. A 100% margin is mathematically impossible (it would mean the cost is $0), which is one reason mixing up the two terms causes real pricing errors.

Which one should I use when setting prices?

Margin is on selling price. Markup is on cost. They are not interchangeable labels. Retailers often think in margin (since it ties directly to revenue), while some wholesale and manufacturing pricing is built from markup on cost -- use whichever matches how your business already tracks profitability, but never assume the two numbers are close to each other.

Does this calculator include sales tax or payment fees?

No. It's a pure cost-vs-price conversion. Build any tax, discount, or processing fee into the cost or price figures before entering them if you want those reflected in the margin and markup shown.

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