45% Markup to Margin: a 45% markup is a 31% margin
At 45% markup the selling price is cost × (1 + 45/100), and the margin, the share of the price that is profit, is 31%. Everything below is derived from that one line.
Check any cost at 45% markup
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The formula
45 ÷ 145 × 100 = 31%
A 45% markup can never be a 45% margin because you would need the profit to equal 45% of a price that already contains the profit. On a $88.00 cost the price is $127.60; the $39.60 of profit is 31% of that, and no amount of rounding closes the gap.
Price table at 45% markup
Every row adds 45% to the cost. The margin column is the same on every line, 31%, because margin depends only on the percentage, not on the amount.
| Cost | Price at 45% markup | Gross profit | Margin |
|---|---|---|---|
| $5.00 | $7.25 | $2.25 | 31% |
| $10.00 | $14.50 | $4.50 | 31% |
| $25.00 | $36.25 | $11.25 | 31% |
| $50.00 | $72.50 | $22.50 | 31% |
| $100.00 | $145.00 | $45.00 | 31% |
| $250.00 | $362.50 | $112.50 | 31% |
| $500.00 | $725.00 | $225.00 | 31% |
| $1,000.00 | $1,450.00 | $450.00 | 31% |
| $2,500.00 | $3,625.00 | $1,125.00 | 31% |
| $10,000.00 | $14,500.00 | $4,500.00 | 31% |
Markups near 45%
From 35% to 55% markup the margin moves from 25.9% to 35.5%: 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
Take a $88.00 item. At 45% markup the ticket price is $127.60, which leaves $39.60 after paying for the item. That $39.60 is 45% of what you paid but 31% of what you charged, and only the second number tells you how much of the sale is yours to spend on overheads.
Why the two percentages differ
The expensive mistake is quoting 45% markup to someone who hears 45% margin. If a distributor asks for a "45% margin" and you give them 45% markup, they receive 31% and the relationship starts with a dispute over 14 points of margin per sale.
When to use markup, when to use margin
Use 45% markup when you price from cost upward: a tradesperson adding a handling charge to parts, a reseller applying a standard uplift to a supplier price list, or a café pricing a $88.00 ingredient cost to a $127.60 menu item. Switch to margin, 31%, when you report to anyone who reads a profit and loss statement.
If what you actually want is a 45% margin, the markup has to be 81.8%, not 45%. On a $88.00 cost that means a price of $160.00 instead of $127.60.
See the mirror page: what markup gives a 45% margin.