85% Markup to Margin: a 85% markup is a 45.9% margin
If you add 85% to your cost, you are keeping 45.9% of every sale as gross profit. That gap between 85 and 45.9 is the single most common pricing mistake we see in small-business spreadsheets.
Check any cost at 85% markup
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The formula
85 ÷ 185 × 100 = 45.9%
Here is the whole relationship in one sentence: margin = markup ÷ (100 + markup). Put 85 in and you get 45.9. Put the margin back through markup = margin ÷ (100 − margin) and you return to 85. The two figures are locked together; only the label changes.
Price table at 85% markup
Every row adds 85% to the cost. The margin column is the same on every line, 45.9%, because margin depends only on the percentage, not on the amount.
| Cost | Price at 85% markup | Gross profit | Margin |
|---|---|---|---|
| $5.00 | $9.25 | $4.25 | 45.9% |
| $10.00 | $18.50 | $8.50 | 45.9% |
| $25.00 | $46.25 | $21.25 | 45.9% |
| $50.00 | $92.50 | $42.50 | 45.9% |
| $100.00 | $185.00 | $85.00 | 45.9% |
| $250.00 | $462.50 | $212.50 | 45.9% |
| $500.00 | $925.00 | $425.00 | 45.9% |
| $1,000.00 | $1,850.00 | $850.00 | 45.9% |
| $2,500.00 | $4,625.00 | $2,125.00 | 45.9% |
| $10,000.00 | $18,500.00 | $8,500.00 | 45.9% |
Markups near 85%
From 75% to 95% markup the margin moves from 42.9% to 48.7%: 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
Suppose the landed cost is $18.00. Marking it up by 85% gives a price of $33.30 and a gross profit of $15.30. Divide the profit by the price and you get 45.9%: that is the margin a bank or a marketplace dashboard will show for the same sale.
Why the two percentages differ
When you compare suppliers, make sure both quote the same measure. One quoting 85% markup and another quoting 45.9% margin are offering the identical deal; one quoting 85% margin is offering a much richer one.
When to use markup, when to use margin
Markup is the shop-floor number and margin is the boardroom number. If you are setting shelf prices from a cost sheet, 85% markup is the figure you apply. If you are working out whether a 45.9% margin covers rent, wages and marketing, margin is the figure you need.
If what you actually want is a 85% margin, the markup has to be 566.7%, not 85%. On a $18.00 cost that means a price of $120.00 instead of $33.30.
See the mirror page: what markup gives a 85% margin.