How it's calculated
Markup is the amount you add on top of your cost, written as a percentage of that cost. The calculator multiplies the cost by one plus the markup, then works out the profit and the margin that price gives you.
Selling price = cost × (1 + markup ÷ 100)
Markup = (price − cost) ÷ cost × 100
Equivalent margin = markup ÷ (100 + markup) × 100
Worked example: a $40 item at 50% markup
40 × 1.50 = $60.00. The profit is $60.00 − $40.00 = $20.00. As a share of the cost that is 20 ÷ 40 = 50%, the markup you chose. As a share of the price it is 20 ÷ 60 = 33.3%, which is your margin. Same sale, same $20, two different percentages.
Common markups and the margin they give
Use this to translate between the two. If your accountant or a supplier quotes margins and you price with markups (or the other way round), read across the row.
| Markup | Margin | Multiply cost by | $10 cost sells for |
|---|---|---|---|
| 10% | 9.1% | 1.1 | $11.00 |
| 15% | 13% | 1.15 | $11.50 |
| 20% | 16.7% | 1.2 | $12.00 |
| 25% | 20% | 1.25 | $12.50 |
| 30% | 23.1% | 1.3 | $13.00 |
| 40% | 28.6% | 1.4 | $14.00 |
| 50% | 33.3% | 1.5 | $15.00 |
| 60% | 37.5% | 1.6 | $16.00 |
| 75% | 42.9% | 1.75 | $17.50 |
| 100% | 50% | 2 | $20.00 |
| 150% | 60% | 2.5 | $25.00 |
| 200% | 66.7% | 3 | $30.00 |
| 300% | 75% | 4 | $40.00 |
A 100% markup, doubling the cost, is known in retail as keystone pricing. It produces a 50% gross margin, not 100% (OneCart's keystone pricing guide walks through the same arithmetic).
Markup or margin: which should you use?
Markup is easier at the till: take the cost, multiply, done. Margin is easier when you plan the business, because it tells you what share of every sale is left over to pay rent, wages and yourself. Margin is gross profit divided by revenue (see the Corporate Finance Institute's definition), so it matches the numbers on your profit and loss statement.
The danger is mixing them up. A shop that needs a 40% margin to cover its overheads but prices with a 40% markup only earns a 28.6% margin, and loses money on every sale without noticing.
Tips for setting a markup
- Start from your full cost per item: supplier price plus inbound shipping, duties and packaging.
- Card processing and marketplace fees are a percentage of the selling price. Leave room for them in your markup.
- Round to a sensible price after calculating. $59.99 instead of $60.00 changes the markup by a fraction of a percent.
- Check what similar products sell for. The formula tells you what you need, not what customers will pay.
Prices are rounded to the nearest cent. Percentages are shown to two decimal places.
Questions people ask
How do I calculate a selling price from a markup?
Multiply the cost by 1 plus the markup as a decimal. A $40 cost with a 50% markup is 40 × 1.50 = $60.00. The $20.00 you added is 50% of the cost.
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a $40 cost gives a $60 price and a 33.3% margin. To get a 50% margin you need a 100% markup: $40 cost, $80 price, $40 profit, which is half of the price.
What is keystone pricing?
Keystone pricing means selling at double the wholesale cost. That is a 100% markup and a 50% margin. It is a common starting point in retail, though many categories price above or below it.
Can markup be more than 100%?
Yes. Markup is measured against cost, so it has no upper limit. A $5 item sold for $20 has a 300% markup. Margin is different: it can never reach 100% unless the item cost nothing.
Why does the calculator reject a zero cost?
Markup is profit divided by cost, and you cannot divide by zero. If something cost you nothing, every sale is pure profit and the margin is 100%, but there is no markup percentage to report. Use the profit margin calculator for that case.