Markup Calculator
Calculate markup percentage, profit margin, and selling prices for your products. Perfect for retail, wholesale, and ecommerce businesses. Convert between markup and margin instantly.
Calculate Markup from Prices
Enter the cost and selling price to calculate the markup percentage
The amount you paid for the item
The price you are selling the item for
Understanding the Formulas
Markup Formula
Markup is based on the COST price. It shows how much you add on top of what you paid.
Margin Formula
Margin is based on the SELLING price. It shows what percentage of revenue is profit.
What is Markup?
Markup is the amount added to the cost price of a product to determine its selling price. It is typically expressed as a percentage of the cost. Understanding markup is essential for pricing products profitably while remaining competitive.
Markup Formula
Example: Buy for $50, sell for $75 → Markup = ((75-50)/50) × 100 = 50%
Markup vs Profit Margin: The Key Difference
Markup
- Formula: (Profit / Cost) × 100
- Use case: Setting prices from costs
- Example: $50 cost + 50% markup = $75 price
Profit Margin
- Formula: (Profit / Selling Price) × 100
- Use case: Analyzing profitability
- Example: $75 price - $50 cost = 33.3% margin
Important: The same dollar profit gives different percentages. A 50% markup equals a 33.3% margin. A 100% markup equals a 50% margin. Always clarify which metric you are using when discussing pricing.
Common Industry Markups
| Industry | Typical Markup | Equivalent Margin | Notes |
|---|---|---|---|
| Grocery | 5-25% | 5-20% | High volume, low margin |
| Clothing/Apparel | 100-200% | 50-67% | Keystone (2x) is common |
| Jewelry | 100-300% | 50-75% | Higher for luxury brands |
| Electronics | 10-30% | 9-23% | Competitive, thin margins |
| Restaurant | 200-300% | 67-75% | Food cost 25-35% is standard |
| Furniture | 100-150% | 50-60% | Often sold with financing |
How to Set Your Markup
1. Know Your Costs
Include all costs: product cost, shipping, handling, packaging, and any other direct costs associated with the product.
2. Research Competitors
Check what similar products sell for. Your markup needs to keep you competitive while still profitable.
3. Consider Your Overhead
Your markup must cover rent, utilities, salaries, marketing, and other operating expenses beyond product costs.
4. Factor in Discounts
If you plan to offer sales or discounts, build that into your initial markup so you remain profitable during promotions.
5. Test and Adjust
Start with industry-standard markups and adjust based on sales volume and customer response. Track your results.
6. Consider Perceived Value
Premium products can command higher markups. Low prices may actually hurt sales of luxury or quality items.
Frequently Asked Questions
What is keystone markup?
Keystone markup is a 100% markup, meaning you double the cost price. It is a common starting point in retail, especially for clothing and specialty goods. A $50 cost becomes a $100 selling price.
Why use markup instead of margin?
Markup is easier to calculate when setting prices from costs. You simply multiply the cost by a factor. Margin is more useful when analyzing profitability from revenue figures. Both are valid and often used together.
How do I convert markup to margin?
Use this formula: Margin % = Markup % / (100 + Markup %) × 100. For example, 50% markup = 50/(100+50) × 100 = 33.3% margin.
Can markup be more than 100%?
Yes, markup can be any percentage. A 200% markup means you are charging three times the cost (cost + 200% of cost = 3x cost). This is common in industries like jewelry, restaurants, and luxury goods.