55% Markup to Margin: a 55% markup is a 35.5% margin
If you add 55% to your cost, you are keeping 35.5% of every sale as gross profit. That gap between 55 and 35.5 is the single most common pricing mistake we see in small-business spreadsheets.
Check any cost at 55% markup
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The formula
55 ÷ 155 × 100 = 35.5%
Here is the whole relationship in one sentence: margin = markup ÷ (100 + markup). Put 55 in and you get 35.5. Put the margin back through markup = margin ÷ (100 − margin) and you return to 55. The two figures are locked together; only the label changes.
Price table at 55% markup
Every row adds 55% to the cost. The margin column is the same on every line, 35.5%, because margin depends only on the percentage, not on the amount.
| Cost | Price at 55% markup | Gross profit | Margin |
|---|---|---|---|
| $5.00 | $7.75 | $2.75 | 35.5% |
| $10.00 | $15.50 | $5.50 | 35.5% |
| $25.00 | $38.75 | $13.75 | 35.5% |
| $50.00 | $77.50 | $27.50 | 35.5% |
| $100.00 | $155.00 | $55.00 | 35.5% |
| $250.00 | $387.50 | $137.50 | 35.5% |
| $500.00 | $775.00 | $275.00 | 35.5% |
| $1,000.00 | $1,550.00 | $550.00 | 35.5% |
| $2,500.00 | $3,875.00 | $1,375.00 | 35.5% |
| $10,000.00 | $15,500.00 | $5,500.00 | 35.5% |
Markups near 55%
From 45% to 65% markup the margin moves from 31% to 39.4%: 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 $149.00, markup 55%, price $230.95, profit $81.95, margin 35.5%. If the same item had to earn a 55% margin instead, the price would have to be $331.11, a markup of 122.2%.
Why the two percentages differ
When you compare suppliers, make sure both quote the same measure. One quoting 55% markup and another quoting 35.5% margin are offering the identical deal; one quoting 55% margin is offering a much richer one.
When to use markup, when to use margin
Use markup for the mechanics of pricing and margin for the decision. The mechanics: $149.00 × 1.55 = $230.95. The decision: does keeping 35.5% of $230.95 pay for everything that is not the product? If it does not, the markup is too low, whatever the competition charges.
The reverse question comes up just as often: what markup produces a 55% margin? The answer is 122.2% (from 55 ÷ (100 − 55)). At 55% markup you are 19.5 points short of that.
See the mirror page: what markup gives a 55% margin.