Gross margin
33.3%
Selling price
£9.00
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 66.7% | 40% |
| 100% | 50% |
Free markup to margin converter
Type a markup to see the margin it gives you, or a margin to see the markup you need. Add a cost for the price in pounds.
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 66.7% | 40% |
| 100% | 50% |
Both come from the same profit. Markup measures it against the cost; margin measures it against the selling price. Since the price is bigger than the cost, the margin is always the smaller of the two numbers, and the gap widens the more you add on.
| Cost | Markup | Price | Profit | Margin |
|---|---|---|---|---|
| £6.00 | 25% | £7.50 | £1.50 | 20% |
| £6.00 | 50% | £9.00 | £3.00 | 33.3% |
| £6.00 | 66.7% | £10.00 | £4.00 | 40% |
| £6.00 | 100% | £12.00 | £6.00 | 50% |
Read down the table and the pattern is plain: to double your margin from 20% to 40% you need well over double the markup, 25% to 66.7%. Owners who think in markup routinely believe they're earning more than they are.
Markup is the shop-floor number. It's how you turn a cost on a delivery note into a price: cost × (1 + markup). Wholesalers' recommended retail prices are often quoted as a markup too.
Margin is the management number. Your accounts, your accountant, lenders and trade benchmarks all talk in gross margin, because it says how much of your takings is left to pay for everything else. If someone tells you a typical convenience store runs on 25%, they mean margin, which is a 33.3% markup.
So set prices with markup if it's quicker, but check the result against the margin you need. The converter above does that in one step.
Delivery platforms add a third number: commission, taken from the price the customer pays. To keep the same cash profit after a commission c, the app price has to be your shop price ÷ (1 − c). At 30% commission that is a 42.9% markup on your shop price, before any VAT effect. On Deliveroo, restaurants are also ranked by the markup across their top 20 items, and anything from 25% upwards starts to cost ranking. Tick "Selling this on a delivery app?" to carry your numbers into the delivery pricing calculator, or read whether Deliveroo prices have to match in-store.
Divide the markup by one plus the markup, using decimals. A 50% markup is 0.5 ÷ 1.5 = 0.333, a 33.3% margin.
Divide the margin by one minus the margin. A 40% margin is 0.4 ÷ 0.6 = 0.667, a 66.7% markup. On a £6 cost that means charging £10.
Both use the same profit, but margin divides it by the selling price and markup divides it by the cost. The selling price is larger than the cost whenever you make a profit, so the margin percentage is smaller.
A 33.3% markup. Multiply the cost by 1.333: a £3 cost becomes a £4 price, keeping £1, which is 25% of £4.
Selling on delivery apps? Use the delivery pricing calculator, or see all our guides and calculators.
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