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Markup vs margin: the same profit, two different numbers

A 30% markup and a 30% margin are not the same price. The difference is only the denominator — cost versus selling price — but that is enough to quietly under-price a whole catalogue. This calculator prices from either figure and shows the conversion table underneath.

Price from a markup or from a margin

Enter your cost price, then choose whether you are working from a markup on cost or a target margin on the price you charge. The table converts a range of markups into the margins they actually produce.

Selling price₹13,000
Cost price
₹10,000
Profit per unit
₹3,000
Markup on cost
30%
Margin on price
23.08%

A 30% markup is only a 23.08% margin. To actually keep 30% of the price as profit, mark up by 42.86%.

Markup and margin at the same profit

Markup on costMargin on priceSelling price
10%9.09%₹11,000
15%13.04%₹11,500
20%16.67%₹12,000
25%20%₹12,500
30%23.08%₹13,000
40%28.57%₹14,000
50%33.33%₹15,000
75%42.86%₹17,500
100%50%₹20,000
150%60%₹25,000
200%66.67%₹30,000

How this is calculated

From a markup: Price = Cost × (1 + Markup ÷ 100)
From a margin: Price = Cost ÷ (1 − Margin ÷ 100)
Markup % = (Price − Cost) ÷ Cost × 100
Margin % = (Price − Cost) ÷ Price × 100

The two formulas look different because the price itself is unknown when you start from a margin — that is why a margin has to be solved for, and a markup does not. This is also why margin-based pricing is the safer way to quote: as costs rise, the price you calculated from a margin holds the same margin.

Worked example

A job costs ₹10,000. Applying a 30% markup gives ₹10,000 × 1.30 = ₹13,000, a profit of ₹3,000. But ₹3,000 as a share of what you charge is ₹3,000 ÷ ₹13,000 = 23.1% — so a "30%" quote is really a 23.1% margin. If you needed a true 30% margin, the price would be ₹10,000 ÷ 0.70 = ₹14,285.71, a profit of ₹4,285.71.

The gap widens as the percentage rises. A 50% markup produces a price of ₹15,000 and a margin of 33.3%. A 100% markup — selling at double cost — is a 50% margin. The two figures only agree at 100%, which is why mixing them across a price list quietly loses money on the higher-priced work.

Where this actually goes wrong

The classic Indian small-business version of this is a price list that says "50% margin" on an item whose cost has quietly risen. If the list was really built on 50% markup, the real margin is 33.3% and every price increase discussion starts from a number that was never true. Because the two only coincide at 100%, the error is silent until someone recalculates from the cost.

For a shop it matters most on the items people negotiate hardest. A customer who is "getting a good discount" at 15% off a high-margin line costs you very little real margin; the same discount on a thin item can take it negative. Knowing the margin on each line, rather than the markup, is what tells you how much discount room actually exists.

For an agency or consultancy the same arithmetic decides what a change order is worth. If extra work lands at your normal markup instead of a higher one, you have worked more hours for the same return. Fix the margin you will accept in advance rather than per request.

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