Calculation
Mathematical Formula For Reverse Percentage
Mathematical Formula For Calculating Margin
Margin = (Selling Price − Cost) / Selling Price × 100
Example Broken Down With Steps
You buy a product for $60 and sell it for $100.
Step 1: Find the profit: 100 − 60 = 40
Step 2: Divide profit by selling price: 40 / 100 = 0.40
Step 3: Convert to percentage: 0.40 × 100 = 40%
Result: The margin is 40%.
Further Explained
Margin expresses profit as a percentage of the selling price. It tells you what portion of each dollar of revenue is actual profit. A 40% margin means that for every $100 in sales, $40 is profit and $60 covers the cost.
Margin vs. Markup: They Are Not the Same
Margin and markup both describe the relationship between cost and selling price, but they use different bases for the calculation and always produce different numbers.
Margin divides profit by the selling price
Markup divides profit by the cost
The Formulas
Margin = (Selling Price − Cost) / Selling Price × 100
Markup = (Selling Price − Cost) / Cost × 100
Example Broken Down With Steps
A product costs $60 and sells for $100. The profit is $40.
Margin: 40 / 100 × 100 = 40%
Markup: 40 / 60 × 100 = 66.7%
The same $40 profit is a 40% margin but a 66.7% markup.
Conversion Table
MarkupEquivalent Margin25%20%33.3%25%50%33.3%100%50%200%66.7%
Conversion Formulas
Margin = Markup / (1 + Markup)
Markup = Margin / (1 − Margin)
(Use decimal form for these calculations: 50% markup = 0.50)
Markup is always a larger number than margin for the same profit. They only equal each other at 0%.
For markup calculations, see our Markup Calculator.
Margin vs. Markup: They Are Not the Same
Margin and markup both describe the relationship between cost and selling price, but they use different bases for the calculation and always produce different numbers.
Margin divides profit by the selling price
Markup divides profit by the cost
The Formulas
Margin = (Selling Price − Cost) / Selling Price × 100
Markup = (Selling Price − Cost) / Cost × 100
Example Broken Down With Steps
A product costs $60 and sells for $100. The profit is $40.
Margin: 40 / 100 × 100 = 40%
Markup: 40 / 60 × 100 = 66.7%
The same $40 profit is a 40% margin but a 66.7% markup.
Conversion Table
MarkupEquivalent Margin25%20%33.3%25%50%33.3%100%50%200%66.7%
Conversion Formulas
Margin = Markup / (1 + Markup)
Markup = Margin / (1 − Margin)
(Use decimal form for these calculations: 50% markup = 0.50)
Markup is always a larger number than margin for the same profit. They only equal each other at 0%.
For markup calculations, see our Markup Calculator.