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I sell at double my cost, so why is my margin 50% and not 100%?

Because what you doubled is the cost, and that is a 100% markup. Margin is measured against the selling price, and here the profit is half the price, so the margin is 50%. The calculator is right; the two figures describe the same profit from two sides.

Published · 3 min read

The arithmetic

Worked example

Cost 50 and price 100: profit 50.

Markup is 100%, because 50 ÷ 50 = 1.

Margin is 50%, because 50 ÷ 100 = 0.5.

Plenty of traders say 'I make 100% on this' when they mean they sell at twice what they paid. That is true as a markup, but misleading if you set it next to another product's margin, or quote it to a lender or a partner who asks for your margin.

Why margin can never hit 100%

Margin is the part of the price left after the cost. To reach 100%, the entire price would have to be profit, meaning the cost is zero. As long as a product costs anything, the margin stays under 100% however high you push the price. Try it in the Profit margin calculator with a cost of 50:

  • Price 150 (three times cost): margin 66.67%, markup 200%.
  • Price 250 (five times cost): margin 80%, markup 400%.
  • Price 1000 (twenty times cost): margin 95%, markup 1900%.

Markup climbs without limit, while margin creeps towards 100% and never touches it.

What multiple of cost each margin needs

For a target margin, divide the cost by (1 − the margin) to get the price. With a cost of 50 the results are below, each one checked in the calculator:

  • 50% margin: price 100, twice the cost.
  • 60% margin: price 125, 2.5 times the cost. The markup here is 150%.
  • 70% margin: price 166.67, about 3.33 times. The markup is 233.34%.
  • 80% margin: price 250, five times the cost.

Keep this list handy for when someone asks for 'a 60% margin': the answer is not adding 60% to the cost, it is multiplying the cost by 2.5.

Which figure to quote, and when

Talking to a supplier or pricing on the fly, 'double the cost' or 'a 100% markup' may be the clearer phrase. Comparing the profitability of your products or showing numbers to a partner, use margin, because it measures your share of every sale. And if commissions and shipping come off the top, work out the target price with the Selling-price calculator, because doubling alone will not give you the same margin once fees are taken.

Common questions

Is a 50% margin good?

It depends on your business and the costs outside the product itself. The calculator gives you the exact figure; judging it depends on what remains after shipping, ads and rent.

Can markup ever be lower than margin?

Not when you make a profit. With any positive profit, markup is always the larger of the two.