Markup to Margin Conversion Chart and Formula

Quick answer: To convert markup to gross margin, divide markup by (1 + markup). For a 25% markup, 0.25 ÷ 1.25 = 20% margin. Both percentages refer to the same gross profit but use different bases.

Want to check a price rather than convert a rate? Use the Profit Margin Calculator and enter the cost and selling price.

Markup-to-margin lookup chart

This is a mathematical reference chart, not a suggested price list. Rates are rounded to two decimal places.

How the conversion works

Imagine cost = $100 and markup = 25%. Selling price is $125, with profit $25. That $25 is 25% of cost but only 20% of the selling price. Writing markup as a decimal m, the general formula is margin = m ÷ (1 + m).

Margin back to markup

The reverse formula is markup = margin ÷ (1 − margin). For example, a 40% gross margin corresponds to 0.40 ÷ 0.60 = 66.67% markup. This is a conversion between percentages, not a recommendation to use that rate.

Spreadsheet reference formulas

If A2 contains markup formatted as a percentage, use =A2/(1+A2) and format the result cell as a percentage. If B2 contains a margin, use =IF(B2>=1,"N/A",B2/(1-B2)) for the reverse. Make sure you do not enter 25 when the sheet expects 25% (0.25).

Three quick reasonableness checks

• With non-negative cost and profit, gross margin is normally lower than markup.
• A 100% markup means doubling cost, and therefore a 50% margin.
• Small markups produce similar, but not identical, margins. The difference grows as the rate rises.

Read the worked explanation

For an explanation of why the denominators differ, see Profit Margin vs Markup. For working backwards from a specified goal, see selling price from target margin.