15% Margin to Markup: a 15% margin needs a 17.6% markup
To earn a 15% gross margin you have to mark cost up by 17.6%. Margin is measured on the selling price, markup on the cost, so the markup is always the larger number.
Price any cost at a 15% margin
Prefilled with this page's numbers. Change either field; results update instantly and nothing is sent anywhere.
The formula
15 ÷ 85 × 100 = 17.6%
price = cost ÷ (1 − 15/100) = cost ÷ 0.85
A 15% margin and a 17.6% markup are the same price. The margin figure is what appears on a profit and loss statement; the markup figure is what you type into a price list. Keep both in the spreadsheet and label them honestly.
Price table at 15% margin
Each price is the cost divided by 0.85. The markup column stays at 17.6% on every line; only the amounts scale.
| Cost | Price at 15% margin | Gross profit | Markup |
|---|---|---|---|
| $5.00 | $5.88 | $0.88 | 17.6% |
| $10.00 | $11.76 | $1.76 | 17.6% |
| $25.00 | $29.41 | $4.41 | 17.6% |
| $50.00 | $58.82 | $8.82 | 17.6% |
| $100.00 | $117.65 | $17.65 | 17.6% |
| $250.00 | $294.12 | $44.12 | 17.6% |
| $500.00 | $588.24 | $88.24 | 17.6% |
| $1,000.00 | $1,176.47 | $176.47 | 17.6% |
| $2,500.00 | $2,941.18 | $441.18 | 17.6% |
| $10,000.00 | $11,764.71 | $1,764.71 | 17.6% |
Margins near 15%
Between 5% and 25% margin the markup needed runs from 5.3% to 33.3%: it climbs faster than the margin because the cost share of the price keeps shrinking. The multiplier column turns a cost list into prices at that margin in one step.
Worked example
Suppose the landed cost is $120.00 and the buyer requires a 15% margin. The price cannot be below $141.18. At that price the profit is $21.18; below it the buyer's margin falls under 15% and the line fails their review.
The margin-as-markup trap
The classic error is adding 15% to cost and calling it a 15% margin. That gives a margin of only 13%, and on a full year of sales the shortfall is 2 points of gross margin that the business planned to spend.
When a margin target is the right tool
Convert the 15% margin to a 17.6% markup once, then work in markup on the shop floor. Applying 17.6% to each supplier cost is faster than dividing by 0.85, and both produce the same price.
Coming from the other direction: a 15% markup, the number people often type by mistake, produces only a 13% margin. The 15% margin on this page needs the full 17.6% markup.
Mirror page: what margin a 15% markup produces.