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Markup and Margin Conversion

Also known as margin to markup · markup vs margin conversion

m=g1−gm = \frac{g}{1 - g}

Worked example: 20% margin → 25% markup — press Try an example to run it live, then adjust anything.

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Markup and Margin Conversion explained

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Since markup and margin describe the same transaction from two directions, converting between them is pure algebra: m=g/(1−g)m = g/(1-g) one way and g=m/(1+m)g = m/(1+m) the other. A 20% margin is a 25% markup. A 50% markup is a 33.3% margin. A 100% markup, the old "keystone" pricing of retail, is a 50% margin.

Keep three landmarks in your head and you will rarely be badly wrong: 20% margin equals 25% markup, 33% margin equals 50% markup, 50% margin equals 100% markup. Markup is always the larger number, and the gap widens fast as profitability rises. At a 60% margin the markup is 150%.

This is worth a laminated card by the estimating desk. A supplier quoting you in markup and a banker quoting you in margin are describing the same job, and the only way to argue with either of them is to speak both languages fluently.

Markup and Margin Conversion formula

m=g1−gm = \frac{g}{1 - g}
Where
  • mm= Markup on cost
  • gg= Gross margin on price

Missing one of these? Work it out first, then come back

Part of this formula set

Pricing and profit

5 formulasMarkup, margin, break-even and ROI — the four numbers that decide whether the work is worth doing.