Markup Calculator
Cost to price, or price to markup. The markup calculator also shows the margin it corresponds to, because those two get swapped constantly.
Selling price
- Unit cost
- $60.00
- Selling price
- $90.00
- Profit per unit
- $30.00
- Markup on cost Profit as a share of the $60.00 cost.
- 50%
- Margin on price The same $30.00 as a share of the $90.00 price. Always the smaller of the two.
- 33.33%
- Price as a multiple of cost The number a buyer calls your 'keystone' if it is 2x.
- 1.500x
- Discount that wipes out the profit Which is the margin. A discount of half that (16.7%) removes half the profit per sale.
- 33.3%
- Profit after a 10% discount Down from $30.00, a fall of 30%. You would need to sell 43% more units to stand still.
- $21.00
| Markup | Margin | Price on a $60.00 cost |
|---|---|---|
| 10% | 9.1% | $66.00 |
| 20% | 16.7% | $72.00 |
| 25% | 20% | $75.00 |
| 33.3% | 25% | $79.98 |
| 50% | 33.3% | $90.00 |
| 66.7% | 40% | $100.02 |
| 100% | 50% | $120.00 |
| 150% | 60% | $150.00 |
| 200% | 66.7% | $180.00 |
- Markup is profit over cost; margin is profit over price. A 100% markup is a 50% margin, and a 50% markup is a 33.3% margin.
- A markup has no upper limit; 400% is a perfectly ordinary retail markup. A margin cannot reach 100%, because that would mean the item cost nothing.
How the Markup Calculator works
Markup is how much you add to a cost to arrive at a price, expressed as a percentage of that cost. A $60 item marked up 50% sells for $90. The arithmetic is price = cost x (1 + markup), and it runs the other way as markup = (price - cost) / cost.
Margin is the same profit measured against the price instead. That $90 sale on a $60 cost is a $30 profit: a 50% markup and a 33.3% margin. Same transaction, same dollars, different denominator.
The relationship between them is fixed and worth memorizing at a few points, because they get swapped in conversation constantly:
- 25% markup is a 20% margin - 33.3% markup is a 25% margin - 50% markup is a 33.3% margin - 100% markup is a 50% margin - 200% markup is a 66.7% margin
Markup is always the larger number, and the gap widens as both rise. The formula to convert is margin = markup / (1 + markup), and back the other way markup = margin / (1 - margin).
Why the distinction has teeth: suppliers, wholesalers and tradespeople think in markup, because they start from a cost. Finance, investors and accounting think in margin, because they start from revenue and an income statement reads downward from it. The same business describing itself to a supplier and to an investor will legitimately quote two different percentages, and anyone translating between the two without converting will be wrong by a predictable amount.
The expensive version of the mistake is pricing. Told to hit a 40% margin, applying a 40% markup gives a 28.6% margin and leaves money on the table on every unit. The correct move is price = cost / (1 - margin). Going the other way is harmless but confusing: a 40% markup quoted as a 40% margin overstates profitability in a pitch deck.
Markup also has no ceiling, which margin does. 300% markup is ordinary in apparel and 400-500% is normal in restaurant drinks. Margin asymptotes toward 100% and can never reach it, because reaching it would mean the goods were free. If somebody quotes a 150% margin they mean markup.
One more practical matter. Markup on cost is only as good as the cost. If "cost" is the invoice price and ignores freight, duty, payment processing, returns and shrinkage, the real landed cost is higher and the actual margin is lower than the one being planned with. A 50% markup on an incomplete cost is routinely a 20% real margin, which is how businesses with healthy-looking price lists run out of money.
Markup Calculator FAQ
How do I calculate markup?
Subtract the cost from the price and divide by the cost. A $60 item sold for $90 is (90 - 60) / 60 = 50% markup. To go the other way, price = cost x (1 + markup), so a 50% markup on $60 is $90.
Is a 50% markup the same as a 50% margin?
No. A 50% markup is a 33.3% margin. Markup divides profit by cost and margin divides it by price, so markup is always the larger figure. To convert: margin = markup / (1 + markup), and markup = margin / (1 - margin).
What markup should I use?
Enough to cover your gross margin requirement after all landed costs. Work backwards: decide the net margin the business needs, add operating expenses as a share of revenue to get the gross margin, then convert that margin to a markup. Industry conventions (keystone at 2x in retail, 3-4x in apparel) are starting points, not answers.
Why does my markup not produce the profit I expected?
Usually because the cost figure is incomplete. Freight, duty, payment processing fees, returns and shrinkage all sit between the invoice price and the real landed cost. A 50% markup on an invoice price that is 80% of the true cost is closer to a 20% real margin.