Markup Calculator

Calculate selling price from cost and desired markup percentage

What Is Markup? A Complete Pricing Guide

Markup is the percentage added to the cost of a product or service to arrive at the selling price. It is one of the most fundamental concepts in business pricing and is used by virtually every company that sells physical or digital goods. Understanding markup is essential for setting profitable prices, negotiating with suppliers, and managing your business finances.

The markup formula is simple: you take your cost, add a percentage on top, and that becomes your selling price. A 50% markup on a $100 item means you add $50, selling it for $150. But the simplicity of the concept hides an important nuance — markup and margin are not the same thing, and confusing them can cost your business thousands of dollars.

This calculator lets you work in both directions: enter a cost and markup percentage to find the selling price, or enter a cost and selling price to find the markup percentage. It also shows the equivalent profit margin and provides reference tables for common industry markups.

Markup Formulas

Calculate Selling Price from Markup

Selling Price = Cost × (1 + Markup% / 100)

Example: Cost is $80, markup is 75%. Selling price = $80 × (1 + 0.75) = $80 × 1.75 = $140.

Calculate Markup from Price and Cost

Markup % = (Selling Price - Cost) / Cost × 100

Example: Cost is $80, selling price is $140. Markup = ($140 - $80) / $80 × 100 = 75%.

Converting Between Markup and Margin

Margin = Markup / (1 + Markup)   |   Markup = Margin / (1 - Margin)

Example: 75% markup = 0.75 / 1.75 = 42.86% margin. The margin is always lower than markup.

Real-World Markup Examples

Example 1: Retail Clothing Store

A boutique buys dresses from a wholesaler at $40 each and uses keystone pricing (100% markup):

  • Cost: $40
  • Markup: 100%
  • Selling price: $40 × 2.00 = $80
  • Profit per dress: $40
  • Margin: 50%

Example 2: Restaurant Menu Pricing

A restaurant prices a pasta dish. The food cost is $3.50 per plate:

  • Food cost: $3.50
  • Markup: 300% (standard for restaurants)
  • Menu price: $3.50 × 4.00 = $14.00
  • Gross profit per plate: $10.50
  • Margin: 75%

The 300% markup sounds high, but restaurants have enormous overhead — rent, staff wages, utilities, equipment, and food waste. A 75% gross margin on food typically results in only 3-9% net margin.

Example 3: Electronics Retailer

An electronics store buys a laptop from the manufacturer:

  • Cost: $600
  • Markup: 40%
  • Selling price: $600 × 1.40 = $840
  • Profit per laptop: $240
  • Margin: 28.6%

Electronics have lower markups because consumers can easily compare prices online. The business makes up for thin margins with high volume and accessory sales (cases, chargers) that have much higher markups.

Markup Pricing Strategies

  • Cost-plus pricing: The simplest strategy — add a fixed percentage markup to all products. Easy to calculate but ignores market conditions and customer willingness to pay.
  • Keystone pricing: Double the cost (100% markup). Standard in many retail sectors and ensures a 50% gross margin.
  • Tiered markup: Apply different markups to different product categories based on competition, demand, and perceived value.
  • Psychological pricing: After calculating markup, adjust to psychological price points ($9.99 instead of $10.00, $199 instead of $210).
  • Competitive pricing: Set markup based on competitor prices rather than a fixed percentage. May result in different markups for different products.

How to Use This Markup Calculator

  1. Choose your calculation mode: "Markup to Price" calculates the selling price from cost and markup. "Price to Markup" finds the markup from cost and selling price.
  2. Enter your cost: The price you paid for the product or the cost to produce it.
  3. Enter markup or selling price: Depending on the mode, enter either the markup percentage or the selling price.
  4. Click Calculate: View the selling price, profit amount, markup percentage, and equivalent profit margin.
  5. Reference the tables: Use the markup vs margin table and industry markup reference to validate your pricing strategy.

FAQ

What is markup in business?

Markup is the percentage added to the cost of a product or service to determine its selling price. It represents how much more the selling price is compared to the cost. For example, if a product costs $100 and you sell it for $150, the markup is 50% because you added $50 (50% of $100) to the cost. Markup is one of the most common pricing strategies used by retailers, wholesalers, and service businesses.

How do you calculate markup percentage?

Markup Percentage = (Selling Price - Cost) / Cost × 100. For example, if you buy a product for $40 and sell it for $60: Markup = ($60 - $40) / $40 × 100 = 50%. This means you marked up the product by 50% above its cost. To calculate selling price from markup: Selling Price = Cost × (1 + Markup% / 100).

What is the difference between markup and margin?

Markup is calculated based on cost: Markup = Profit / Cost × 100. Margin is calculated based on selling price: Margin = Profit / Selling Price × 100. For the same transaction ($40 cost, $60 selling price), markup = 50% but margin = 33.3%. Margin is always less than markup. A 100% markup equals a 50% margin. Confusing these two is one of the most expensive mistakes in business pricing.

What markup should I use for my business?

The ideal markup depends on your industry, competition, and operating costs. Grocery stores use 5-25% markups due to high volume. Clothing retailers use 100-300% (keystone markup is 100%, or doubling the cost). Restaurants mark up food 200-400%. Electronics use 30-50%. Jewelry uses 100-400%. The key is that your markup must be high enough to cover ALL operating expenses (not just COGS) and still leave a profit.

What is keystone pricing?

Keystone pricing is a simple pricing strategy where the selling price is set at exactly double the wholesale or cost price — a 100% markup, which equals a 50% margin. For example, if you buy a shirt for $20 wholesale, you price it at $40 retail. Keystone pricing is widely used in retail because it is simple and typically covers overhead costs while leaving room for markdowns and promotions. Some luxury and specialty items use "triple keystone" (200% markup).

How do I convert markup to margin?

To convert markup to margin: Margin = Markup / (1 + Markup), using decimal forms. For example, 50% markup = 0.50 / (1 + 0.50) = 0.333 = 33.3% margin. To convert margin to markup: Markup = Margin / (1 - Margin). For example, 40% margin = 0.40 / (1 - 0.40) = 0.667 = 66.7% markup. Remember: for any positive profit, markup percentage is always higher than margin percentage.

Can markup be more than 100%?

Yes, markup can exceed 100% and it is very common in many industries. A 100% markup means you doubled the cost (keystone pricing). A 200% markup means the selling price is 3 times the cost. A 500% markup means the selling price is 6 times the cost. High markups are typical in restaurants (a $2 pasta becomes a $12 dish), beverages (a $0.20 soda sells for $2), and software (near-zero marginal cost, high markup).

Should I price based on markup or margin?

Both methods arrive at the same price — it is a matter of which perspective you find more useful. Markup is intuitive for pricing: "I will add 50% to my cost." Margin is more useful for financial analysis: "40% of my revenue is profit." Most retailers think in markup for day-to-day pricing, while accountants and financial analysts prefer margin. The critical thing is to not confuse them — if you think you are using a 40% margin but are actually applying a 40% markup, your real margin is only 28.6%.

Related Tools

Profit Margin Calculator Break-Even Calculator ROI Calculator