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Markup calculator
Enter your cost and either a markup percentage or a selling price to get the other, along with the profit and the margin it works out to.
Markup is profit as a percentage of cost; margin is the same profit as a percentage of the selling price.
How markup and price are calculated
Markup is the amount you add to cost, written as a percentage of that cost. To get the price, multiply: price = cost × (1 + markup ÷ 100). A $40 item with a 50% markup sells for 40 × 1.5 = $60, a profit of $20. Working backwards, if you know the price, the markup is profit ÷ cost × 100, so a $40 cost sold at $80 is a $40 profit and a 100% markup.
The same $20 profit can be described two ways. As a markup it is 20 ÷ 40 = 50% of cost. As a margin it is 20 ÷ 60 = 33.3% of the selling price. Markup is always the larger number because cost is smaller than price. Confusing the two is the most common pricing error: setting a 50% markup when you meant a 50% margin leaves you well short of the profit you expected.
| Markup | Equivalent margin |
|---|---|
| 10% | 9.1% |
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 200% | 66.7% |
Choosing a markup
Markup is convenient at the till because it starts from the cost you already know, which is why retail and wholesale pricing is usually quoted this way. Keep in mind that the markup has to cover more than the profit you keep: rent, wages, shrinkage and returns all come out of it before anything reaches the bottom line, so a healthy-looking markup can still leave a thin net margin.
To convert between the two, margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin). A keystone markup, doubling the cost, is a 100% markup and exactly a 50% margin. If a price ever falls below cost the markup goes negative and every sale loses money, which the calculator flags so a discount never quietly slips under your cost.
Frequently asked questions
What is the difference between markup and margin?
Both describe the same profit. Markup expresses it as a percentage of cost; margin expresses it as a percentage of the selling price. Markup is always the larger figure for the same sale.
How do I convert a markup to a margin?
Divide the markup by one plus the markup. A 50% markup is 0.5 ÷ 1.5 = 33.3% margin. To go the other way, margin ÷ (1 − margin) gives the markup.
What does a 100% markup mean?
You are doubling the cost, so a $40 item sells for $80. That is known as keystone pricing in retail, and it works out to exactly a 50% margin on the selling price.