Use this markup calculator to turn a product cost and a markup percentage into a selling price, or to work out what markup a price already gives you. It also shows profit per unit and gross margin, so you can see both numbers side by side.
How The Markup Formula Works
Markup is the amount you add on top of cost, expressed as a percentage of that cost. The formulas are:
- Selling price = cost x (1 + markup %)
- Markup % = (price – cost) / cost x 100
- Gross margin % = (price – cost) / price x 100
For example, a product that costs $50 with a 40% markup sells for $70. The profit is $20, which is a 40% markup on cost but only a 28.57% gross margin on the selling price.
Markup Vs Margin
Markup and margin describe the same profit from different starting points. Markup divides profit by cost, while margin divides profit by price, so margin is always the smaller number. Mixing them up is one of the most common pricing mistakes: a business that wants a 40% margin but applies a 40% markup ends up with a margin under 29%.
| Markup | Equivalent Gross Margin |
|---|---|
| 25% | 20.0% |
| 33.3% | 25.0% |
| 50% | 33.3% |
| 66.7% | 40.0% |
| 100% | 50.0% |
| 150% | 60.0% |
| 200% | 66.7% |
To convert a target margin into the markup you need, use markup = margin / (1 – margin). A 40% margin needs a 66.7% markup.
Frequently Asked Questions
What is a good markup percentage?
It depends on the industry and your overhead. Grocery and electronics retail often work on thin markups, while apparel, jewelry, cosmetics and restaurant drinks commonly carry markups of 100% or more. The right markup must cover operating costs such as rent, payroll, marketing and payment fees, not just the cost of goods.
What does keystone pricing mean?
Keystone pricing is a 100% markup, or doubling the wholesale cost. It produces a 50% gross margin and is a common starting point in retail.
Should fees and shipping be part of cost?
Yes, if you pay them on every unit. Include inbound freight, packaging and per-order costs in unit cost before applying markup. Marketplace and payment fees are charged on the selling price, so check them separately with a tool such as our PayPal fee calculator.
