Markup Calculator
Calculate your selling price from cost using either a markup percentage or a target margin percentage.
How does markup pricing work?
Markup is the amount added to a product's cost to determine its selling price, expressed as a percentage of the cost. If an item costs you $20 and you apply a 50% markup, you add $10 (50% of $20) to get a $30 selling price. The formula is: Selling Price = Cost × (1 + Markup% ÷ 100). Markup pricing is intuitive because you're always working from a number you already know — your cost — which is why it's the default pricing method for many retailers and wholesalers.
Markup vs. margin: why the math is genuinely different
This is one of the most common pricing mistakes in small business: assuming a 50% markup produces a 50% margin. It doesn't. Markup is calculated on cost; margin is calculated on the selling price. Using the same $20-cost, $30-price example: the markup is 50% ($10 profit ÷ $20 cost), but the margin is only 33.3% ($10 profit ÷ $30 selling price). This gap gets larger as the percentage increases — a 100% markup is only a 50% margin, and a 300% markup is only a 75% margin. If you're setting prices to hit a specific margin target (say, because you need 40% margin to cover overhead), you cannot simply apply a 40% markup — you need to use the margin formula: Selling Price = Cost ÷ (1 − Margin% ÷ 100). This calculator lets you toggle between both modes so you always get the price that matches what you actually meant.
When should I price by markup vs. by margin?
Retailers and product-based businesses often think in markup because it's simple to apply to a cost sheet. Businesses focused on financial targets — hitting a specific profitability goal, matching investor expectations, or benchmarking against industry margin standards — usually need to think in margin, since that's how profitability is reported on financial statements. If your business plan says "we need a 40% margin to be profitable," use the margin mode here rather than guessing at an equivalent markup percentage.
Frequently Asked Questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. The same dollar profit produces a higher markup percentage than margin percentage, because cost is a smaller number than the final selling price.
Does a 50% markup equal a 50% margin?
No. A 50% markup on a $20 cost gives a $30 price, which is only a 33.3% margin. Markup and margin are only equal at 0%; they diverge more the higher the percentage gets.
How do I calculate selling price from a target margin?
Divide the cost by (1 minus the target margin as a decimal). For example, to hit a 40% margin on a $20 cost item: $20 ÷ (1 − 0.40) = $33.33 selling price.
Which is more common in retail, pricing by markup or by margin?
Markup is more commonly used at the point of setting individual product prices since it's simple to apply directly to a cost. Margin is more commonly used when evaluating overall business profitability and financial targets.
What is a typical markup percentage for retail products?
It varies widely by category — clothing retailers often use 100% markup (called "keystone" pricing), while grocery items might only see 10-30% markup due to thin margins and high competition.
Why did my calculated price change when I switched from markup mode to margin mode?
Because they use different formulas — the same percentage number produces a different selling price depending on whether it's applied to cost (markup) or to the final price (margin). Switching modes without adjusting the number will not preserve the same price.
Can markup percentage be higher than 100%?
Yes — markup has no mathematical ceiling since it's based on cost, unlike margin which approaches but never reaches 100% as price increases relative to cost. A 200% markup simply means the selling price is three times the cost.
Should I include shipping and overhead in "cost per unit"?
For an accurate markup, your cost per unit should include all direct costs — materials, production, and often inbound shipping — so your resulting price genuinely covers what the product cost you to acquire or produce.