Markup vs Margin Converter

Markup is profit as a share of cost; margin is profit as a share of the selling price. That is why a 25% markup is only a 20% margin — the classic small-business mix-up this tool fixes. The two are exact inverses of one another.

markup → margin = markup / (1 + markup)
margin → markup = margin / (1 − margin)
price multiplier = 1 + markup = 1 / (1 − margin)
sample price     = cost × multiplier

Example: a 25% markup means 0.25 / 1.25 = 0.20, a 20% gross margin, and a price multiplier of ×1.25 — so a $100 cost sells for $125. Markup has no upper limit; margin can never reach 100% (markup would be infinite), so a 100%+ margin is rejected rather than clamped.

Optional trade bands are industry-typical net margins — a different thing from the gross margin this tool converts — shown only as a sanity check.

If the distinction is still slippery, markup vs margin states it in a paragraph and gross margin defines the half of it people quote most often.

Converting a ratio is the abstract version of a decision you make on every quote. The parts and material markup calculator applies it to resold parts, the whole-job quote build-up applies it across every row of an estimate, and which one you actually earned only becomes clear once the work is finished.

Formula: margin = markup / (1 + markup) · markup = margin / (1 − margin)

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