Which should I use to set prices, markup or margin?

Think in margin (it maps to what you keep), calculate with markup (it maps to how you build the price from cost). The traps appear when a number labeled one is used as the other.

Why is margin always smaller than markup?

Same profit, bigger denominator: margin divides by price, markup divides by cost. The gap widens as percentages grow, which is why the confusion is cheap at 10% and expensive at 50%.

What markup do agencies put on subcontractors?

Commonly 30-100% on freelancer cost, covering management, revisions, and risk. If you subcontract, our subcontractor guidance in the project price calculator applies the same logic.

Small business

Markup vs margin calculator

The most expensive confusion in pricing: a 50% markup is only a 33% margin. This converts in both directions and shows the markup you actually need for the margin you want.

Your numbers

Currency

Cost

What the unit or project costs you.

Markup on cost

The percentage you add on top of cost.

Results

Margin this really is33.3%

Price: $150
Profit per unit: $50

Markup needed for target margins

For 20% margin: 25%
For 30% margin: 42.9%
For 50% margin: 100%

Estimate

workingfigures.com/calculators/markup-vs-margin-calculator

The formula

Price = cost × (1 + markup). Margin = markup ÷ (1 + markup). Markup for a target margin = margin ÷ (1 − margin). A 50% margin needs a 100% markup.

What this ignores

Psychological price points, competitor ceilings, and volume effects. It converts percentages; your market decides whether the price survives.

FAQ

Which should I use to set prices, markup or margin?: Think in margin (it maps to what you keep), calculate with markup (it maps to how you build the price from cost). The traps appear when a number labeled one is used as the other.
Why is margin always smaller than markup?: Same profit, bigger denominator: margin divides by price, markup divides by cost. The gap widens as percentages grow, which is why the confusion is cheap at 10% and expensive at 50%.
What markup do agencies put on subcontractors?: Commonly 30-100% on freelancer cost, covering management, revisions, and risk. If you subcontract, our subcontractor guidance in the project price calculator applies the same logic.