Calculate selling price, markup percentage, and profit from your cost basis
Markup is the percentage added to the cost of a product to determine its selling price. It's one of the most fundamental concepts in pricing strategy, used by retailers, wholesalers, and service providers worldwide. Unlike profit margin (which is based on selling price), markup is calculated as a percentage of your cost.
For example, if a product costs you $50 and you apply a 100% markup, the selling price becomes $100. The markup represents how much you're adding on top of your cost to cover overhead expenses and generate profit.
Understanding markup is essential for setting profitable prices while remaining competitive. A markup that's too low won't cover your expenses, while one that's too high may drive customers to competitors.
The terms markup and margin are often used interchangeably, but they calculate profit differently. This distinction is critical for accurate pricing and financial reporting.
Based on COST. A 50% markup on $100 cost = $150 price ($50 profit).
Based on PRICE. That same $150 sale has a 33.3% margin ($50 profit).
A 50% markup does NOT equal 50% margin. Always convert between them carefully.
Margin = Markup / (1 + Markup). Example: 0.50 / 1.50 = 33.3%
Different industries operate with vastly different markup percentages based on factors like competition, overhead costs, and customer expectations.
| Industry/Product | Typical Markup | Resulting Margin | Notes |
|---|---|---|---|
| Grocery Items | 10-25% | 9-20% | High volume, low margin |
| Clothing Retail | 100-300% | 50-75% | Keystone pricing common |
| Jewelry | 100-400% | 50-80% | Luxury perception |
| Electronics | 30-50% | 23-33% | Price competition |
| Furniture | 200-400% | 67-80% | Showroom costs |
| Restaurants | 200-400% | 67-80% | Labor & overhead |
| Auto Parts | 50-100% | 33-50% | Specialty items higher |
| Cosmetics | 300-500% | 75-83% | Brand value premium |
Double your cost (100% markup). Simple and widely used in retail. Results in a 50% margin on every sale.
Apply different markups based on product value. Lower markups on expensive items (50%) and higher on cheap items (200%+).
Use higher markups (300%+) for luxury or specialty items where customers expect to pay more for quality.
Match or slightly undercut competitors. Calculate your minimum viable markup to stay profitable.
A boutique buys a t-shirt wholesale for $30 and wants a straightforward 50% markup over cost.
ResultSelling price $45.00. Profit $15.00 per unit. Markup 50.00%. Equivalent margin 33.33%.
The calculator applies Price = Cost × (1 + Markup ÷ 100) = 30 × 1.5 = $45. Profit is the $15 gap between price and cost. Margin is Profit ÷ Price = 15 ÷ 45 = 33.33%, which is what the margin calculator would report for the same sale — note it is not 50%.
An independent gift shop uses the retail standard of keystone pricing (double the cost) on a $42 wholesale item.
ResultSelling price $84.00. Profit $42.00 per unit. Markup 100.00%. Equivalent margin 50.00%.
Keystone is simply a 100% markup: Price = 42 × 2 = $84. Profit equals cost, but the margin lands at exactly 50% because half of every selling-price dollar is profit. This is the only case where the markup is exactly double the margin.
A maker is selling a candle for $59.99 retail and wants to know what markup that represents on a $19.50 cost.
ResultProfit $40.49 per unit. Markup 207.64%. Equivalent margin 67.49%.
In Calculate Markup mode the tool runs Markup = (Price − Cost) ÷ Cost × 100 = (59.99 − 19.50) ÷ 19.50 × 100 ≈ 207.64%. The equivalent margin (67.49%) is what would appear on an income statement, since margin divides the same $40.49 profit by the $59.99 selling price instead of by the cost.
In Calculate Price mode the calculator applies . The profit is simply price minus cost, and the equivalent margin is computed as . All four numbers — cost, price, profit, and the two percentages — come from one input pair, so changing either value updates the rest.
In Calculate Markup mode the tool solves the reverse problem from a known selling price and cost: . This is what retailers use to back-check whether a discounted or promotional price still hits their target markup.
Markup and margin describe the same profit dollars over two different denominators. Markup uses cost as the base, margin uses revenue. Use to convert (with markup as a decimal): a 50% markup converts to 0.5/1.5 = 33.33% margin; a 100% (keystone) markup converts to 0.5 = 50% margin; a 300% markup converts to 3/4 = 75% margin.
The calculator runs entirely in your browser, treats all values as the same currency (no tax or shipping is added), and does not store inputs. To layer in sales tax, freight, or payment-processor fees, fold them into your cost before entering or compute the post-tax price separately — markup as a concept assumes a clean cost-to-price relationship.
They describe the same profit dollars but use different bases. Markup divides profit by cost; margin divides the same profit by selling price. Because the selling price is always larger than the cost on a profitable sale, the margin percentage will always be smaller than the markup percentage. Convert with Margin = Markup ÷ (1 + Markup).
No. A 100% markup means you doubled the cost — profit equals cost, and margin equals 50%. A 100% margin would mean cost was zero (the entire selling price is profit), which only happens with services where input cost is effectively nil. In retail, you can never reach 100% margin while paying for the goods.
Keystone pricing is the long-standing retail convention of doubling the wholesale cost — a 100% markup — to set the selling price. It produces a clean 50% margin and a price that is easy to communicate to staff and customers. Many gift, apparel, and book retailers still use keystone as a baseline before adjusting for promotions and competition.
Start from the markup your category typically supports (use the industry table on this page as a guide), then test whether that price covers all operating costs and your target profit. The U.S. Small Business Administration recommends pricing that covers cost of goods, overhead allocation, and a profit margin appropriate to your competitive position, not just a flat percentage rule.
No. Sales tax is a pass-through collected for the government and is not your revenue. Compute markup on the pre-tax price and pre-tax cost; add tax separately at checkout. The IRS treats sales tax collected as a liability, not income, so it must stay out of the markup math for accurate books.
Markup is a percentage on cost. Gross profit is the dollar amount of revenue minus cost of goods sold. A $20 cost item sold at $50 has a $30 gross profit, a 150% markup, and a 60% gross margin — same sale, three different ways to describe the same $30. AICPA and U.S. GAAP guidance reports profit as a dollar amount and margin as a percentage of revenue, not as markup.
MSRP — Manufacturer's Suggested Retail Price — is a price the maker recommends retailers charge. The maker has already chosen a markup over their own cost when setting MSRP. Retailers can choose to honor MSRP, mark up further, or discount; antitrust rules (FTC) prohibit manufacturers from forcing retailers to hold a minimum price in most cases.
Use Markup = Margin ÷ (1 − Margin), with margin as a decimal. So a 40% margin equals 0.40 ÷ 0.60 = 66.67% markup; a 50% margin equals 100% markup (keystone); a 75% margin equals 300% markup. The calculator shows both numbers automatically, but this formula is handy when only one is given.
It depends on what 'cost' means in your books. Many retailers apply markup to the unit landed cost (COGS) and rely on volume to cover fixed overhead. Service firms often roll overhead into a fully loaded cost and then add a smaller markup. Either approach works as long as you are consistent so the markup target actually delivers the gross profit you need.
The on-page tool calculates per-unit price, profit, markup, and margin. For total revenue or profit at a given quantity, multiply the per-unit figures by units sold — or use the markup utility's revenue helper that takes cost, markup, and quantity. The percentages do not change with quantity; only the dollar amounts scale.
POS systems usually report gross margin (profit ÷ price) by default, while the markup field in their item setup is markup over cost. If you entered 50% in the POS markup field expecting a 50% margin, the POS will correctly report 33.33% margin on the resulting sale. Reconcile by using the Equivalent Margin field on this calculator before pushing prices to the POS.
A discount reduces the selling price but not the cost, so it eats markup non-linearly. A 20% discount on a 50% markup ($30 cost → $45 → $36) leaves a markup of only 20%, not 30%. Run the post-discount price through Calculate Markup mode before approving any promo to make sure you still clear your floor.
This calculator applies the markup definition Markup % = (Price − Cost) ÷ Cost × 100. In Calculate Price mode it computes Price = Cost × (1 + Markup ÷ 100); in Calculate Markup mode it solves for the markup percentage given a known selling price and cost. Profit is reported as Price − Cost, and the equivalent margin is shown as Profit ÷ Price × 100 so users can convert between markup and margin without leaving the page. All math runs client-side in a single currency; sales tax, freight, and payment-processor fees are excluded and must be folded into the input cost if you want them reflected.
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