Breakdown
How it works
A 50% markup is a 33% margin; a 50% margin needs a 100% markup. Accountants and investors talk margin; retailers and tradespeople often talk markup. To hit a target margin, divide cost by (1 − margin) — never multiply by (1 + margin).
Formula
Margin = (price − cost) ÷ price
Markup = (price − cost) ÷ cost
Price for target margin = cost ÷ (1 − margin)
Margin = markup ÷ (1 + markup)
Worked example
Cost 60, price 100: margin 40%, markup 66.7%. For a 50% margin price = 60 ÷ 0.5 = 120 (not 90).
Frequently asked questions
What is a good gross margin?
Software 70–90%, restaurants 60–70% (food cost 30–35%), retail 25–50%, construction 15–25%, grocery 20–30%. Net margin after all costs is far lower.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). 25% markup → 20% margin. 100% markup → 50% margin.
Does margin include VAT?
No — calculate on net (ex-VAT) prices. VAT is collected for the government and is not revenue.