Markup Calculator
Calculate markup percentage, selling price, and profit with step-by-step mathematical solutions. Convert between markup and margin instantly.
Markup Calculator
Markup vs Margin Quick Reference
| Margin | Markup | Multiplier |
|---|---|---|
| 10% | 11.11% | 1.111 |
| 20% | 25% | 1.25 |
| 25% | 33.33% | 1.333 |
| 30% | 42.86% | 1.429 |
| 33.33% | 50% | 1.50 |
| 40% | 66.67% | 1.667 |
| 50% | 100% (Keystone) | 2.00 |
| 60% | 150% | 2.50 |
| 75% | 300% | 4.00 |
Multiplier = (Cost × Multiplier) = Selling Price
What is Markup?
Markup is the amount added to the cost of a product or service to determine its selling price. Expressed as a percentage, markup represents how much profit you add relative to your cost. It is one of the most fundamental concepts in business pricing and retail mathematics.
The markup formula is:
For example, if you purchase a product for $50 (cost) and sell it for $100 (selling price), your markup is:
Markup = ($100 − $50) ÷ $50 × 100 = $50 ÷ $50 × 100 = 100%
This 100% markup is also known as "keystone markup" in retail, meaning you double the cost to get the selling price. This is a common pricing strategy in many retail businesses.
Markup vs. Margin: The Critical Difference
While markup and margin both measure profitability, they calculate it differently and should never be confused. Using the wrong metric can lead to significant pricing errors.
Markup
Percentage added to cost
Can exceed 100%
Margin
Percentage of selling price
Always less than 100%
Example Comparison
Using the same example: Cost = $50, Selling Price = $100, Profit = $50
- Markup = $50 ÷ $50 × 100 = 100% (profit relative to cost)
- Margin = $50 ÷ $100 × 100 = 50% (profit relative to selling price)
Conversion Formulas
Markup to Margin:
Margin = Markup ÷ (1 + Markup)
Margin to Markup:
Markup = Margin ÷ (1 − Margin)
Why This Matters
If you want a 50% margin but accidentally apply a 50% markup, you will undercharge significantly:
- 50% markup on $50 cost = $75 selling price (only 33.33% margin)
- 50% margin requires 100% markup = $100 selling price
This mistake costs you $25 per unit in lost profit!
How to Calculate Markup: Step-by-Step Guide
Method 1: Finding Markup Percentage
When you know both the cost and selling price, use this formula:
Example: A retailer buys t-shirts for $15 and sells them for $24.
Markup = ($24 − $15) ÷ $15 × 100
Markup = $9 ÷ $15 × 100
Markup = 0.6 × 100 = 60%
Method 2: Finding Selling Price from Markup
When you know the cost and desired markup percentage:
Selling Price = Cost × (1 + Markup % ÷ 100)
Example: A product costs $40 and you want a 75% markup.
Selling Price = $40 × (1 + 75 ÷ 100)
Selling Price = $40 × 1.75
Selling Price = $70
Method 3: Finding Cost from Selling Price and Markup
When you know the selling price and markup percentage:
Example: A product sells for $150 with a 50% markup. What was the cost?
Cost = $150 ÷ (1 + 50 ÷ 100)
Cost = $150 ÷ 1.5
Cost = $100
Real-World Markup Applications
Retail
Retailers typically use 50-100% markup (keystone pricing). Fashion retail often uses higher markups (100-300%) to cover returns, seasonality, and discounting.
Common: 50% - 100% markup
Wholesale
Wholesalers operate on thinner markups (10-30%) but sell in larger volumes. They bridge manufacturers and retailers.
Common: 10% - 30% markup
Manufacturing
Manufacturers use markups ranging from 30-50% to cover production costs, R&D, and distribution while remaining competitive.
Common: 30% - 50% markup
E-commerce
Online sellers can vary widely from 30-200% depending on competition, niche, and brand value. Lower overhead allows competitive pricing.
Common: 30% - 200% markup
Standard Markup Percentages by Industry
| Industry | Typical Markup | Equivalent Margin | Multiplier |
|---|---|---|---|
| Groceries | 5% - 15% | 4.8% - 13% | 1.05 - 1.15 |
| Electronics | 20% - 50% | 17% - 33% | 1.20 - 1.50 |
| Clothing | 100% - 300% | 50% - 75% | 2.00 - 4.00 |
| Restaurants | 200% - 400% | 67% - 80% | 3.00 - 5.00 |
| Jewelry | 100% - 500% | 50% - 83% | 2.00 - 6.00 |
| Furniture | 80% - 150% | 44% - 60% | 1.80 - 2.50 |
| Pharmaceuticals | 30% - 100% | 23% - 50% | 1.30 - 2.00 |
| Software/SaaS | 500% - 1000%+ | 83% - 91% | 6.00 - 11.00 |
Note: These are general industry averages. Actual markups vary based on brand positioning, competition, and market conditions.
Common Markup Calculation Mistakes
Mistake #1: Confusing Markup with Margin
The most common error is using margin when you mean markup, or vice versa.
Wrong: "I need a 50% margin, so I'll markup by 50%"
Correct: "For a 50% margin, I need a 100% markup"
Mistake #2: Not Including All Costs
Many businesses only consider product cost, ignoring shipping, handling, and overhead.
Tip: Use "landed cost" (product + shipping + handling + fees) as your base for markup calculations.
Mistake #3: Using a Single Markup for All Products
Different products may require different markups based on competition, demand, and perceived value.
Tip: High-demand items can sustain higher markups; commodity items need competitive pricing.
Mistake #4: Forgetting to Adjust for Discounts
If you plan to offer sales or discounts, your initial markup must account for this.
Example: To maintain 30% margin after a 20% discount, you need approximately 87.5% initial markup.
Essential Markup Formulas
Basic Markup Formulas
Markup % = (Selling Price − Cost) ÷ Cost × 100
Selling Price = Cost × (1 + Markup %)
Cost = Selling Price ÷ (1 + Markup %)
Profit = Selling Price − Cost
Conversion Formulas
Markup to Margin:
Margin = Markup ÷ (1 + Markup)
Margin to Markup:
Markup = Margin ÷ (1 − Margin)
Quick Multipliers
×1.25
25% markup
×1.50
50% markup
×2.00
100% markup (Keystone)
×3.00
200% markup
Frequently Asked Questions
What is a good markup percentage?
A "good" markup depends on your industry, competition, and overhead costs. Retail typically uses 50-100% (keystone), while restaurants may use 200-400%. Calculate your break-even point first, then add desired profit margin. Use our calculator to experiment with different markups.
What is keystone markup?
Keystone markup is a 100% markup, meaning you double the cost to get the selling price. This is equivalent to a 50% profit margin. It's a traditional retail pricing method that's simple to calculate and widely used as a baseline.
How do I convert markup to margin?
Use the formula: Margin = Markup ÷ (1 + Markup). For example, a 100% markup (1.0) converts to: 1.0 ÷ (1 + 1.0) = 1.0 ÷ 2.0 = 0.50 or 50% margin. You can also use our calculator's margin-to-markup converter.
Can markup be over 100%?
Yes! Markup can be any positive percentage. A 200% markup means you add twice the cost to the selling price (tripling the price). Restaurants, jewelry stores, and luxury goods often use markups well over 100%. However, profit margin can never exceed 100%.
How do I calculate the selling price from markup?
Use the formula: Selling Price = Cost × (1 + Markup ÷ 100). For a $50 product with 60% markup: $50 × 1.60 = $80. Alternatively, multiply the cost by the markup multiplier (60% markup = 1.60 multiplier).
Should I use markup or margin for pricing?
Use markup for setting prices (it's easier to calculate from cost) and margin for analyzing profitability (it shows what portion of revenue is profit). Most retail operations work with markup daily, while financial analysis uses margin. Both measure the same profit differently.
How does markup affect profit?
Higher markup directly increases profit per unit, but may reduce sales volume due to higher prices. The optimal markup balances maximum profit with competitive pricing. Test different markups to find your price elasticity point.
What markup do I need for a specific margin?
Use the formula: Markup = Margin ÷ (1 − Margin). For a 40% margin: 0.40 ÷ (1 − 0.40) = 0.40 ÷ 0.60 = 0.667 or 66.67% markup. Common conversions: 25% margin = 33.33% markup, 33.33% margin = 50% markup, 50% margin = 100% markup.
How do I account for overhead in markup?
Add all costs (product, shipping, handling, storage, overhead allocation) to get your "landed cost" or "true cost." Apply markup to this total cost, not just the product cost. This ensures your pricing covers all business expenses plus desired profit.
What's the difference between gross and net markup?
Gross markup is based only on direct product costs (cost of goods sold). Net markup factors in all costs including overhead, labor, and indirect expenses. Net markup is always lower than gross markup and gives a more accurate picture of true profitability.
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