Markup Calculator
Enter your cost and the markup percentage to get the selling price, the profit per unit, and the resulting profit margin. Markup and margin are not the same number, and this shows both.
How to calculate markup
Markup is the profit expressed as a percentage of cost, while margin is the same profit expressed as a percentage of the selling price. Multiply your cost by the markup percentage to get the profit, then add it to the cost for the selling price. Because the selling price is larger than the cost, the margin percentage is always lower than the markup percentage. A 50% markup on a $100 item, for example, is only a 33.3% margin.
Profit = cost x (markup% / 100); selling price = cost + profit; margin% = (profit / selling price) x 100
Worked example
An item costs you $100 and you apply a 50% markup.
- Profit: $100 x (50 / 100) = $50
- Selling price: $100 + $50 = $150
- Profit margin: $50 / $150 = 33.3%
Result: A 50% markup gives a $150 price, $50 profit, and a 33.3% margin.
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 the selling price. The dollar profit is identical, but the percentages differ. A 50% markup equals a 33.3% margin, because the selling price (the margin's base) is larger than the cost (the markup's base).
How do I convert markup to margin?
Margin = markup / (1 + markup), using decimals. A 50% markup is 0.5 / 1.5 = 0.333, or 33.3% margin. To go the other way, markup = margin / (1 - margin).
How do I set a price for a target margin?
Divide your cost by (1 minus the target margin as a decimal). For a 40% margin on a $100 cost, price = 100 / (1 - 0.40) = $166.67. Pricing from a target margin avoids the common mistake of marking up by the margin percentage, which leaves you short.
Should I price using markup or margin?
Retailers often think in markup because it starts from cost, but margin is what shows on financial statements and what investors compare. Many businesses set prices with markup for simplicity, then check the resulting margin to be sure it covers overhead and profit goals.