The cost price of your product or service.
Percentage added on top of the cost price.
Reg. 07380272 · England & Wales · Est. 2010
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Selling Price
£70.00
Profit
£20.00
Markup %
40.0%
Margin %
28.6%
A 40.0% markup = 28.6% margin
A 28.6% margin = 40.0% markup
Everything you need to know about markup and margin for pricing
What's the difference between markup and margin?
Markup and margin both measure the profit on a product or service, but they are calculated from different bases. Markup expresses profit as a percentage of the cost price — for example, if something costs £50 and you sell it for £70, your markup is 40% (£20 / £50). Margin expresses profit as a percentage of the selling price — using the same example, your margin would be 28.6% (£20 / £70). Because the selling price is always higher than the cost (when there is profit), margin is always a smaller number than markup for the same amount of profit.
How do I convert markup to margin?
To convert a markup percentage to a margin percentage, use the formula: Margin = Markup / (1 + Markup). For example, a 50% markup (0.50) gives a margin of 0.50 / 1.50 = 0.333, or 33.3%. To go the other way, convert margin to markup with: Markup = Margin / (1 - Margin). For example, a 25% margin (0.25) gives a markup of 0.25 / 0.75 = 0.333, or 33.3%. These formulas work for any values and are essential for accurate pricing decisions.
Which should I use for pricing?
The choice between markup and margin often depends on your industry convention. Retailers commonly use markup because it is straightforward — you simply add a fixed percentage on top of your cost. Financial analysts, accountants, and business strategists tend to prefer margin because it directly shows what proportion of revenue is profit, making it easier to compare profitability across products or businesses. Many successful businesses track both: using markup for day-to-day pricing and margin for overall financial analysis and reporting.
Why do people confuse markup and margin?
Markup and margin are frequently confused because they both express profit as a percentage and the terms are sometimes used interchangeably in casual conversation. The confusion can be costly — if you intend a 30% margin but accidentally apply a 30% markup, you will earn less profit than expected. For example, on a £100 cost item: a 30% markup gives a selling price of £130 (profit £30), but a 30% margin requires a selling price of £142.86 (profit £42.86). Always clarify which metric you are using when discussing pricing with colleagues or suppliers.
Business Pricing Tool: This calculator provides accurate markup and margin conversions for UK businesses. For complex pricing strategies involving multiple product lines, volume discounts, or VAT considerations, consult a qualified accountant or business adviser.
Reviewed by M. Samiuddin Quadri, ACCA — Chartered Certified Accountant at Gladstone & Co. · Updated for the 2025/26 tax year.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms