Markup vs Margin
Convert markup to profit margin and back, so you stop mixing the two up. Enter a percentage and instantly see the matching selling price.
Margem equiv. (%)
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Markup and margin: conversion and concept
Markup sits on top of cost: markup = (price − cost) / cost. Margin, on the other hand, is taken from the selling price: margin = (price − cost) / price. To move between the two, use margin = markup / (1 + markup) and markup = margin / (1 − margin). Take a quick example: cost R$ 100, price R$ 150. That's a 50% markup and a 33.3% margin. People trip up by reaching for margin when they actually need markup, which is inappropriate when pricing from cost. Slapping "30% margin" onto a cost lands you at a different price than "30% markup" would.
Applications
You'll lean on this for retail pricing, e-commerce, restaurant menus, deciding whether a promotion makes sense, and weighing one supplier against another. A few rough benchmarks from Brazil: fashion retail tends to run markup ×2.5–3, while supermarkets sit around markup ×1.3–1.5. Restaurants usually mark up raw food cost by ×3–4.
FAQ
Why is markup always larger than margin? The denominators differ. Markup divides by cost, which is smaller than the price that margin divides by. So a 100% markup only works out to a 50% margin.
Which one should I use to price a product? If you're starting from cost, go with markup. Multiply cost by (1 + markup) and you have the price.
Does a 20% discount destroy margin? Pretty much. If you're working on a 33% margin, knocking off 20% eats roughly two-thirds of the profit. Re-run the markup/margin math before you commit to any promotion.
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The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.