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Markup to Margin Calculator

Formula

The formula to convert markup to margin is:

$\text{Mg} = \frac{\text{Mp}}{1 + \text{Mp}}$

Where:

Mg is the margin rate
Mp is the markup rate

Markup to Margin Definition

A markup is a measure of the total percentage above cost that a good is sold at, and the margin is defined as the percentage of gross profit to gross price. To convert markup to margin, divide the markup rate by 1 plus the markup rate.

Example Problem

Let's assume the following:

Markup Rate (Mp): 25%

Step 1: Convert the markup rate to a decimal:

$\text{Mp} = 25\% = 0.25$

Step 2: Calculate the margin rate:

$\text{Mg} = \frac{0.25}{1 + 0.25} = \frac{0.25}{1.25} = 0.2 = 20\%$

Therefore, the margin rate is 20%.