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About this tool
Convert between gross margin and markup percentages and see the cost, selling price, profit and multiplier behind them.
Markup measures profit against cost — (price − cost) ÷ cost — while gross margin measures the same profit against the selling price — (price − cost) ÷ price. Because the denominators differ, markup is always the larger figure on a profitable sale, and confusing the two systematically underprices stock. This converter solves the whole picture from any two of cost, price, margin and markup using the exact identities margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin), and also shows what a discount does to the margin you started with.
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Uses the algebraic conversion, not an approximation, so the numbers reconcile to the cent.
Cost and markup, cost and margin, cost and price, price and margin, or price and markup.
Shows the margin that survives a discount, and flags the point where the sale goes below cost.
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A product costing 100 and selling for 150 carries a 50% markup but a 33.33% margin — the same 50 of profit against two different bases.
Divide the markup by one plus the markup, both as decimals. A 50% markup is 0.5 ÷ 1.5 = 0.3333, or a 33.33% margin. Going the other way, margin ÷ (1 − margin) gives the markup, so a 50% margin needs a 100% markup.
100% — you have to double the cost. This is what retailers call keystone pricing, and it is the clearest example of why the two measures cannot be used interchangeably.
A discount equal to your gross margin percentage takes the sale to exactly break-even on direct cost. On a 40% margin, a 40% discount leaves nothing, and a 20% discount cuts the margin to 25% rather than to 20%.
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