# How do you convert markup to margin?

To convert markup to margin, you need to understand the difference between the two terms. Markup is the amount added to the cost of a product to determine its selling price, while margin is the difference between the selling price and the cost of goods.

Let’s break it down using an example. Suppose you have a product that costs \$110 to produce. If you want to add a markup of \$90, you would calculate the selling price by adding the markup to the cost: \$110 + \$90 = \$200.

To calculate the margin, you subtract the cost of goods from the selling price: \$200 – \$110 = \$90. In this case, the margin is \$90.

To express the markup as a percentage of the cost, you divide the markup by the cost: \$90 / \$110 = 0.82. Multiply this result by 100 to get the percentage: 0.82 * 100 = 82%.

So, the markup of \$90 on a product that costs \$110 represents an 82% markup. The margin for a product sold at a selling price of \$200 with a cost of \$110 would be \$90.

It’s important to note that while markup and margin are related, they represent different aspects of pricing. Markup focuses on the difference between the cost and selling price, while margin represents the profitability of each unit sold.

In summary, to convert markup to margin, you calculate the selling price by adding the markup to the cost of goods. Then, you subtract the cost of goods from the selling price to determine the margin. To express the markup as a percentage of the cost, divide the markup by the cost and multiply by 100.