Convert margin and markup without mixing them up
Margin and markup describe the same profit using different starting points. A seller quoting “25% profit” needs to say which one they mean. The margin and markup converter shows both percentages and a selling price so you can check your pricing instruction before using it.
Start with the cost of one item
Enter the cost attributable to a single sale. In this illustration, an item costs 90 including its purchase cost and any packaging already counted. Choose the percentage type you know. Keep your input currency consistent; selecting KES or PHP changes the label only.
When you know the margin
Choose “Profit margin”, enter a cost of 90 and 25%. The price is 90 ÷ (1 − 0.25) = 120. Profit is 120 − 90 = 30. That profit is 25% of the selling price, but 33.3333% of the cost. The converter therefore reports a markup of approximately 33.3333%.
The general conversion is markup % = margin % ÷ (100 − margin %) × 100. A margin of 100% cannot be achieved with a positive cost and a finite price. The tool rejects that input instead of producing a misleading result.
When you know the markup
Choose “Markup on cost”, enter 90 and 25%. The price is 90 × 1.25 = 112.50 and profit is 22.50. The margin is 22.50 ÷ 112.50 × 100 = 20%. A 25% markup therefore produces a smaller selling price than a 25% margin on the same cost.
| Instruction | Selling price | Profit | Other percentage |
|---|---|---|---|
| 25% margin | 120.00 | 30.00 | 33.3333% markup |
| 25% markup | 112.50 | 22.50 | 20% margin |
Use the result in a pricing conversation
Instead of saying “add 25% profit”, write “use a 25% markup on the item cost” or “aim for a 25% gross margin on the selling price”. Then share the cost and calculated price. This makes the intended denominator clear to a colleague or supplier.
If you round the price to a convenient amount, the actual percentages change. For example, pricing the 90-cost item at 115 produces profit of 25, a markup of about 27.78% and a margin of about 21.74%. Rounding the displayed conversion itself can also create small differences when you convert it back.
Gross profit is not your final take-home profit
Rent, wages, payment fees and taxes that are not in the cost input remain outside this calculation. A fee charged as a percentage of revenue needs separate treatment rather than a fixed amount guessed in advance. Use the daily profit calculator to examine a simple sales-and-fixed-cost scenario, and read the pricing guide for cost assumptions.