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Markup Calculator

Calculate markup percentage, resulting margin, and profit from cost and selling price.

About the Markup Calculator

Markup tells you how much you added on top of cost to arrive at a selling price — the number retailers and manufacturers plan pricing around. This calculator converts your cost and selling price into markup percentage, the equivalent margin percentage, and the dollar profit per unit, so you can sanity-check pricing from both angles.

How It Works

The calculator subtracts cost from selling price to find profit, then divides that profit by cost to get markup percentage. It also computes the same profit divided by selling price to show margin, since the two percentages describe the same sale from different reference points and are frequently confused.

Markup (%) = (Selling Price − Cost) / Cost × 100; Margin (%) = (Selling Price − Cost) / Selling Price × 100.

Worked example

Scenario: An item that costs $40 and sells for $60.

  1. Profit: $60 − $40 = $20.
  2. Markup: $20 ÷ $40 = 50% (profit relative to cost).
  3. Margin: $20 ÷ $60 = 33.33% (profit relative to price).

Result: A 50% markup, which equals a 33.33% margin.

Markup is not margin

Markup measures profit relative to cost, while margin measures profit relative to selling price. A 50% markup does not mean a 50% margin. Keeping the distinction clear prevents pricing and profitability mistakes.

Tips and common mistakes

  • To hit a target margin, price = cost ÷ (1 − margin). For a 40% margin on a $40 item: $40 ÷ 0.6 = $66.67.
  • Retailers often talk in markup, accountants in margin — confirm which one a supplier means.
  • Include shipping and handling in cost before calculating markup.

Assumptions & Limitations

  • Cost is assumed to be the direct unit cost, before any markup is applied.
  • Selling price is assumed to be the final price before tax.
  • Does not account for volume discounts or price elasticity effects on actual sales.
  • A 100% markup is only a 50% margin, not a 100% margin — treat the two figures as distinct.

Frequently Asked Questions

How do I convert markup to margin?

Margin (%) = Markup / (100 + Markup) × 100 — for example a 50% markup always equals a 33.3% margin, since margin is measured against the higher selling price rather than cost.

What markup should I set to hit a target margin?

Required Markup (%) = Target Margin / (100 − Target Margin) × 100 — to hit a 40% margin, for instance, you need roughly a 66.7% markup on cost.

Why do retailers talk in markup but investors talk in margin?

Markup is intuitive for pricing decisions made against a known cost, while margin is more useful for comparing profitability across businesses of different sizes since it is always measured against revenue.

Why is markup always higher than margin?

Both use the same profit, but markup divides by the smaller number (cost) and margin by the larger number (price).

What is keystone pricing?

Doubling the cost — a 100% markup, which is a 50% margin.

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