Markup and margin describe the same dollar profit two different ways, and the difference is a denominator. Markup divides profit by cost; margin divides profit by price. That's why a 50% markup is only a 33.3% margin, a 100% markup is a 50% margin, and a sales call that mentions "50 points" without saying which side is a pricing error waiting to happen. Here are the conversions, the industry conventions, and the markup that hits whatever margin you actually need.
Start with a $50 product that sells for $75. The profit is $25 either way. Call it markup and you divide by cost: $25 ÷ $50 = 50%. Call it margin and you divide by revenue: $25 ÷ $75 = 33.3%. Same sandwich, different bread.
The two formulas, in full:
Markup is always the bigger number for the same profit, because cost is always the smaller denominator. And margin can never reach 100% — the profit would have to equal the whole selling price, leaving the product free. Markup has no such ceiling, which is one reason sales teams like it: "200% markup" sounds twice as impressive as the "66.7% margin" it equals.
You don't need to redo the deal from scratch — each side converts directly:
| Markup | Equals margin | Price on a $100 cost | Profit |
|---|---|---|---|
| 25% | 20.0% | $125.00 | $25.00 |
| 50% | 33.3% | $150.00 | $50.00 |
| 75% | 42.9% | $175.00 | $75.00 |
| 100% | 50.0% | $200.00 | $100.00 |
| 150% | 60.0% | $250.00 | $150.00 |
| 200% | 66.7% | $300.00 | $200.00 |
| 300% | 75.0% | $400.00 | $300.00 |
Run any pair the other direction and the table flips: a 20% margin needs a 25% markup, a 40% margin needs 66.7%, and a 60% margin needs 150%. The pattern worth memorizing is that famous pairs sit a "doubling" apart — 50/33.3, 100/50, 200/66.7 — because doubling cost is a natural human move and halving revenue is what the math charges for it.
There's no universal number, and anyone quoting one is averaging across wildly different cost structures. What exist instead are industry conventions, each built on that industry's volume and overhead:
| Industry | Common convention | Roughly |
|---|---|---|
| Retail apparel | Keystone pricing — double cost | 100% markup / 50% margin |
| Restaurants | Target food cost near a third of menu price | ~200% markup on ingredients |
| Grocery | Thin margins, high volume | Low single-digit to low double-digit markup |
| Contracting | Markup on direct costs to cover overhead + profit | Commonly ~30–75% depending on trade |
| Software / services | Price against value; cost basis is mostly labor | Very high multiples, few conventions |
The honest way to pick yours: decide the gross margin your business needs — rent, labor, and marketing all have to fit inside the gap between price and product cost — then convert that margin into the markup your pricing sheet will show. A 40% target margin means a 66.7% markup. A 35% margin means 53.8%, which is where the contractor example lands: $10,000 quoted on $6,500 of direct costs.
Keystone is the old retail rule of doubling cost at the price tag — a 100% markup, which lands at a 50% margin. It survived a century because it's easy to do in your head and roughly right for mid-century department-store economics. Today it's a starting point, not a law: commodity categories price below keystone to compete, exclusive or low-volume goods price well above it, and markdown planning (that rack of 40%-off coats) eats into whatever margin keystone promised on paper.
Discounts are where the markup/margin gap starts costing real money, because a discount comes straight off the price — margin's denominator — while the cost doesn't move. Take a $75 item that cost $50: that's a 33.3% margin. Mark it 20% off and revenue drops to $60 while cost stays $50. The margin collapses to 16.7% — the discount was a fifth of the price but half the profit.
The same trap runs through fees. Payment processing, marketplace commissions, and shipping allowances all shave revenue after you've set the price. A 3% card fee on that $75 sale takes $2.25 of a $25 profit — about 9% of it. Before advertising any promotion, price the discounted number against cost and see what the margin becomes. The markup calculator does this backwards direction in one step: enter the sale price and the cost, and it shows the margin the discount actually left you with.
Whenever two people use the same number for different things. A vendor promises "50 points" of margin but prices at cost-plus-50 — you expected $100 of revenue on a $50 cost, you got $75, and the missing $25 was your gross profit. Or a category manager sets a "30% markup minimum" that a new hire implements as a 30% margin (a 42.9% markup), pricing the line out of the market overnight.
Comparisons across companies fail the same way. Accountants and investors speak in margins because gross margin sits on the income statement; sales and operations teams speak in markups because cost is what they price from. A distributor marking up freight-inclusive landed cost and a retailer marking up product-only cost aren't describing the same economics even at identical percentages. Define your denominator once, keep it fixed across quarters, and translate before comparing with anyone else's numbers.
Enter cost plus markup — or cost plus target margin — and get price, profit, and both percentages at once.
Markup Calculator →Markup is a cost-side number, margin is a revenue-side number, and every clean conversion between them is one division away. Pick your target margin first, convert it to the markup your team quotes with, and re-check the margin after every discount or fee. Run the exact numbers in the markup calculator, then pair it with the ROI calculator when you're weighing the return on a whole initiative, or the finance calculator for the loan or savings math behind a big inventory buy.
It depends entirely on the industry and cost structure. Grocery works on single-digit margins with volume, restaurants commonly run roughly 200% markup on ingredients, retail apparel often starts at keystone (100% markup, 50% margin), and services support higher multiples on labor. Price against your own target margin and market, not a universal number.
Margin = markup ÷ (1 + markup). A 50% markup is 0.50 ÷ 1.50 = 33.3% margin. To go the other way, markup = margin ÷ (1 − margin): a 40% target margin needs a 66.7% markup.
Doubling cost — a 100% markup, which equals a 50% margin. It is a traditional retail starting point, not a rule; competitive categories price below it and exclusive goods above it.
Because margin divides profit by the selling price, which is the larger number. At a 100% markup, price is twice cost, so the $50 profit on a $100 sale is exactly half of revenue — a 50% margin. Margin can never reach 100% for the same reason.
Divide cost by (1 − 0.40): a $6,500 job prices at $10,833. That is the same as applying a 66.7% markup, which is the number a salesperson would recognize.