Markup vs Margin Calculator
Markup measures your profit against what the work cost. Margin measures the same profit against what the client paid. Enter a cost and any one of the three numbers below, and the other two follow.
Markup vs Margin Calculator
Enter a cost and any one of markup, margin, or price. The other two follow.
Price to charge
$7,500
$2,500 of profit on $5,000 of cost.
Markup
50%
profit ÷ cost
Margin
33.3%
profit ÷ price
Workable margin
Between 20% and 40% margin is common for delivery work in small agencies. It survives a modest over-run.
If you swapped the two terms
Reading 50% as a margin instead prices this job at $10,000, a difference of $2,500 on one quote.
Know the cost side before you set the price.
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The formulas
Profit = Price − Cost
Markup % = Profit / Cost × 100
Margin % = Profit / Price × 100
Price from markup = Cost × (1 + Markup/100)
Price from margin = Cost / (1 − Margin/100)
Margin from markup = Markup / (100 + Markup) × 100
Why a 50% markup is not a 50% margin
This is the error that costs small agencies real money, and it is easy to make because the two words feel interchangeable in conversation.
A brand project costs you $5,000 to deliver. Apply a 50% markup and you charge $7,500, keeping $2,500. That $2,500 is 33.3% of the $7,500 the client paid, so the margin is 33.3%, not 50%. Setting a genuine 50% margin on the same job means charging $10,000. The difference between the two readings is $2,500 on a single quote, which is the entire profit of the first version.
Run that gap across a year of projects and it stops being an arithmetic curiosity. A studio turning over $400,000 that believes it is running 50% margins while actually running 33% is short roughly $67,000 against its own plan, and usually finds out when the tax bill or a slow quarter arrives rather than when the quotes go out.
Markup to margin conversion table
| Markup on cost | Equivalent margin | Price on $1,000 cost |
|---|---|---|
| 10% | 9.1% | $1,100 |
| 20% | 16.7% | $1,200 |
| 25% | 20.0% | $1,250 |
| 33.3% | 25.0% | $1,333 |
| 50% | 33.3% | $1,500 |
| 66.7% | 40.0% | $1,667 |
| 100% | 50.0% | $2,000 |
| 150% | 60.0% | $2,500 |
| 233.3% | 70.0% | $3,333 |
Read it in either direction. A target margin of 40% needs a 66.7% markup on cost.
Which one should an agency use
Use margin for anything you compare or report. It is a share of revenue, so it lines up with the profit line in your accounts and it lets a $4,000 job and a $40,000 job sit in the same column. A target margin is also easier to hold across a mixed service list.
Use markup when you are buying something in and reselling it, because the cost is the number sitting in front of you. Subcontractor fees, print, media, and hosting are all priced this way. The subcontractor markup calculator and the hosting markup calculator both work in markup for that reason.
The failure mode is a business that uses both without saying which. One person quotes a 40% uplift meaning markup, the finance spreadsheet reads it as margin, and the forecast drifts from the bank balance all year. Pick one for internal targets, name it in the template, and convert at the point of quoting.
Neither number means anything until the cost side is real. If the delivery cost is an estimate rather than tracked hours at a loaded cost rate, a healthy-looking margin can still lose money. Check the agency profit margin calculator for the whole-business version of the same question.
Frequently asked questions
What is the difference between markup and margin?+
Both measure the same gap between what work costs you and what you charge. Markup measures that gap against the cost. Margin measures it against the price. A job costing $5,000 sold for $7,500 carries a 50% markup and a 33.3% margin, and the two numbers describe the same $2,500.
What is the markup formula?+
Markup percent = (price minus cost) divided by cost, times 100. To go the other way, price = cost times (1 plus markup divided by 100). A 60% markup on a $2,000 cost gives a price of $3,200.
What is the margin formula?+
Margin percent = (price minus cost) divided by price, times 100. To price from a target margin, price = cost divided by (1 minus margin divided by 100). A 40% margin on a $2,000 cost needs a price of $3,333.
How do I convert markup to margin?+
Margin = markup divided by (100 plus markup), times 100. A 50% markup is a 33.3% margin. A 100% markup is a 50% margin. Going the other way, markup = margin divided by (100 minus margin), times 100, so a 50% margin needs a 100% markup.
Why can margin never reach 100%?+
Margin is profit as a share of the price, so a 100% margin would mean the work cost nothing at all. Markup has no ceiling because it is measured against cost: a $100 cost sold for $1,000 is a 900% markup and a 90% margin.
Is a 50% markup the same as a 50% margin?+
No, and the gap is expensive. On a $5,000 cost, a 50% markup prices the job at $7,500. A 50% margin prices it at $10,000. Quoting the first when you meant the second gives away $2,500 on one project.
What markup should an agency use on subcontractors?+
It depends on the coordination time, the risk you carry, and the gap between paying the subcontractor and being paid yourself. The subcontractor markup calculator works those inputs into a number rather than applying a flat percentage.
Do agencies quote in markup or margin?+
Internally, margin, because it is comparable across jobs and maps to the profit line in the accounts. When buying something in and reselling it, markup, because the cost is the number in front of you. Trouble starts when one person in the business uses each and nobody says which.
Related calculators & guides
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Ascend logs hours against the project as the work happens, so the cost behind your markup comes from tracked time rather than a guess. The free tier covers one client end to end.
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