15% Markup to Margin: a 15% markup is a 13% margin
A 15% markup on cost is a 13% gross margin on the selling price. The two numbers describe the same sale from different ends: markup looks up from what you paid, margin looks down from what you charged.
Check any cost at 15% markup
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The formula
15 ÷ 115 × 100 = 13%
A 15% markup can never be a 15% margin because you would need the profit to equal 15% of a price that already contains the profit. On a $24.99 cost the price is $28.74; the $3.75 of profit is 13% of that, and no amount of rounding closes the gap.
Price table at 15% markup
Every row adds 15% to the cost. The margin column is the same on every line, 13%, because margin depends only on the percentage, not on the amount.
| Cost | Price at 15% markup | Gross profit | Margin |
|---|---|---|---|
| $5.00 | $5.75 | $0.75 | 13% |
| $10.00 | $11.50 | $1.50 | 13% |
| $25.00 | $28.75 | $3.75 | 13% |
| $50.00 | $57.50 | $7.50 | 13% |
| $100.00 | $115.00 | $15.00 | 13% |
| $250.00 | $287.50 | $37.50 | 13% |
| $500.00 | $575.00 | $75.00 | 13% |
| $1,000.00 | $1,150.00 | $150.00 | 13% |
| $2,500.00 | $2,875.00 | $375.00 | 13% |
| $10,000.00 | $11,500.00 | $1,500.00 | 13% |
Markups near 15%
From 5% to 25% markup the margin moves from 4.8% to 20%: each two-point step in markup is worth less than two points of margin at this level, and the gap widens as the markup grows. The multiplier column is what you type into a spreadsheet to price a cost list.
Worked example
Numbers first: cost $24.99, markup 15%, price $28.74, profit $3.75, margin 13%. If the same item had to earn a 15% margin instead, the price would have to be $29.40, a markup of 17.6%.
Why the two percentages differ
The expensive mistake is quoting 15% markup to someone who hears 15% margin. If a distributor asks for a "15% margin" and you give them 15% markup, they receive 13% and the relationship starts with a dispute over 2 points of margin per sale.
When to use markup, when to use margin
Use markup for the mechanics of pricing and margin for the decision. The mechanics: $24.99 × 1.15 = $28.74. The decision: does keeping 13% of $28.74 pay for everything that is not the product? If it does not, the markup is too low, whatever the competition charges.
If what you actually want is a 15% margin, the markup has to be 17.6%, not 15%. On a $24.99 cost that means a price of $29.40 instead of $28.74.
See the mirror page: what markup gives a 15% margin.