🏷️ Markup Calculator
Calculate retail selling price, dollar profit, and understand the difference between Markup % and Gross Profit Margin %. 100% free pricing tool.
What Markup Calculator Does
Markup and margin are the two most confused numbers in small business pricing, and confusing them is expensive in a specific direction: it makes you think you are earning more than you are. They describe the same transaction from different ends. Markup is profit as a share of what the item cost you. Margin is profit as a share of what you sold it for.
Because the selling price is always the larger number, margin is always the smaller percentage. A 40% markup is a 28.6% margin. A 100% markup — doubling your cost — is a 50% margin. The gap widens as the numbers grow, which is why "we work on 50%" means very different things to a buyer and an accountant.
The direction that catches people is working backwards. If you need a 40% margin, marking up by 40% will not get you there; you need a 66.7% markup. Setting prices from a margin target using markup arithmetic quietly underprices everything you sell.
This calculator shows both figures for every price so the two never drift apart, along with the profit in currency, which is the number that actually pays the bills.
How to Use Markup Calculator
- Enter product cost of goods
- Select a retail markup preset (15%, 25%, 40%, 100% Keystone) or enter custom percentage
- View recommended selling price, dollar profit per unit, and resulting gross profit margin %
Formula Used by Markup Calculator
Markup and margin from cost
price = cost × (1 + markup); margin = (price − cost) ÷ price; markup needed for a margin = margin ÷ (1 − margin)
- markup
- profit divided by COST
- margin
- profit divided by PRICE — always the smaller of the two
Worked example
An item costing $100, marked up 40%.
- Price: 100 × 1.40 = $140
- Profit: $40
- Margin: 40 ÷ 140 = 28.6%
Result: 28.6% margin from a 40% markup. To actually achieve a 40% margin you would need a 66.7% markup: 0.4 ÷ (1 − 0.4).
Markup against margin
The same transaction, two ways of describing it. Margin is always lower.
| Markup | Price on $100 cost | Profit | Margin |
|---|---|---|---|
| 20% | $120.00 | $20 | 16.7% |
| 40% | $140.00 | $40 | 28.6% |
| 50% | $150.00 | $50 | 33.3% |
| 66.7% | $166.70 | $66.70 | 40.0% |
| 100% | $200.00 | $100 | 50.0% |
| 150% | $250.00 | $150 | 60.0% |
How to Read Your Result
Know which one your industry quotes
Retail generally talks in markup, because buyers work from cost. Finance and accounting talk in margin, because that is what appears on a profit and loss statement. When someone says "we make 50% on it", the answer is worth clarifying — it is either a 33.3% margin or a 100% markup, and those are very different businesses.
You cannot mark up to a margin
This is the error that costs money. Needing a 40% margin and applying a 40% markup leaves you at 28.6%, and no amount of volume fixes a structurally underpriced product. Work from the margin formula when the target is a margin.
Cost means landed cost
The figure you mark up should include everything that got the item into your hands — the unit price, shipping, duties, payment fees, and any packaging. Marking up the invoice price alone and then paying those out of the profit is how a healthy-looking margin turns into a loss.
Limitations & Accuracy Notes
- Single-item pricing. Blended margins across a range, and loss leaders, need a weighted calculation this does not do.
- It does not know your overheads. A 30% gross margin is not 30% profit — rent, wages and everything else come out of it.
- Sales tax and VAT are excluded; those are collected on behalf of the tax authority and are not revenue.
- No discounting or promotional pricing model, and both erode margin faster than most people expect.
- Nothing here is accounting advice.
Frequently Asked Questions
What is the difference between Markup and Margin?
What is Keystone Pricing?
Why did my margin come out lower than the markup I applied?
How do I convert between them?
What markup should I use?
Should markup be calculated on landed cost?
Does a keystone markup still apply?
Is anything sent to a server?
References & Further Reading
- US Small Business Administration — pricing guidance — Background on cost, pricing and the distinction between gross margin and profit