Markup Calculator: Selling Price, Profit & Margin

Three formulas, one relationship

Markup is profit as a share of cost. Margin is profit as a share of price. Both start from the same numbers: cost (what you paid), price (what the customer pays), and profit (price minus cost).

Markup % = (price − cost) ÷ cost × 100. Margin % = (price − cost) ÷ price × 100. Price from markup = cost × (1 + markup). Price from margin = cost ÷ (1 − margin). The calculator handles all three starting points, so pick the one you actually know.

To convert between them: markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup). A 25% margin is a 33.3% markup. A 25% markup is only a 20% margin.

Worked example: pricing a candle

A small shop makes a candle for $8 in wax, wick, jar, and label. They want a 60% markup. Price = $8 × 1.6 = $12.80. Profit is $4.80. Margin is $4.80 ÷ $12.80 = 37.5%.

Now suppose the owner's accountant says the business needs a 50% gross margin to cover rent, payroll, and card fees. Price = $8 ÷ (1 − 0.50) = $16. That is a 100% markup. The difference between 60% markup and 50% margin is $3.20 per candle, which adds up to $3,200 on a thousand candles.

This is the most common and most expensive pricing mistake small businesses make: someone says we need 50 and they apply it as a markup when they meant margin. Adding 50% to cost only gives a 33.3% margin.

A quick markup to margin table

20% markup = 16.7% margin. 25% markup = 20% margin. 33.3% markup = 25% margin. 50% markup = 33.3% margin. 60% markup = 37.5% margin. 75% markup = 42.9% margin. 100% markup = 50% margin. 150% markup = 60% margin. 200% markup = 66.7% margin. 300% markup = 75% margin.

Notice the shape: margin can approach 100% but never reach it, while markup keeps climbing forever. Luxury goods and software can carry markups of several hundred percent.

What should be in your cost

Markup only works if cost is complete. For a product you resell, that is the wholesale price plus inbound freight and any per-unit packaging. For something you make, include materials and direct labor. Leave out fixed overhead like rent; that is what the margin is supposed to cover.

Marketplace sellers should treat platform fees carefully. Amazon referral fees are typically around 15% of the sale price for many categories, and Etsy charges a 6.5% transaction fee plus payment processing. Because these fees scale with price, they eat margin rather than cost, so target a higher margin instead of padding the cost figure.

Typical markups by industry

Keystone pricing, a 100% markup, is the traditional default for US boutiques, gift shops, and apparel. Jewelry often runs higher. Grocery stores work on thin margins, often in the low single digits of net profit, making money on volume. Restaurants typically price dishes so food cost is about 28% to 35% of the menu price, which works out to a markup of roughly 185% to 257% on ingredients. Beverages, especially wine and cocktails, usually carry the highest markups on the menu.

Use industry norms as a sanity check, not a rule. Your price should cover cost, overhead, and profit, and still make sense next to competitors.

Mistakes to avoid

Confusing markup with margin, covered above. Stacking discounts on a thin markup: a 20% off sale on a 25% markup item leaves you at break-even. Check the math: $100 cost, $125 price, 20% off is $100. Forgetting that cost rises: when a supplier raises prices 8%, keeping the same dollar profit cuts your percentage margin. Re-run your prices whenever costs move.