How to calculate markup
Markup is the percentage you add on top of your cost. Multiply the cost by the markup, then add it back to the cost to get the selling price:
Selling price = Cost × (1 + Markup %)
A $40 item with a 50% markup adds $20, giving a $60 selling price. That $20 profit is a 50% markup on the $40 cost, but only a 33.3% margin on the $60 price.
Markup vs. margin
Markup and margin measure the same profit against different bases — markup against cost, margin against price. Because the selling price is always larger than the cost, the margin percentage is always smaller than the markup percentage:
Margin % = Markup ÷ (1 + Markup) × 100
To work the other way — from a known price and cost, or to price for a target margin — use the margin calculator.
Choosing a markup
"Keystone" pricing doubles the cost (a 100% markup, a 50% margin) and is a common retail starting point. The right number depends on your overhead, how fast the item sells, and what competitors charge. Make sure your cost figure includes shipping and a share of overhead so the markup leaves you real profit.
Frequently asked questions
How do you calculate markup?
Markup is the amount you add to your cost, expressed as a percentage of that cost. Multiply the cost by the markup percentage to get the dollar markup, then add it to the cost for the selling price. A $40 item with a 50% markup adds $20, for a $60 selling price.
What is the difference between markup and margin?
Markup is profit as a percentage of cost, while margin is profit as a percentage of the selling price. The same $20 profit on a $40 item sold for $60 is a 50% markup but a 33.3% margin. Markup is always the larger figure for the same sale.
How do I convert markup to margin?
Divide the markup by one plus the markup (as decimals). A 50% markup becomes 0.50 ÷ 1.50 = 0.333, or a 33.3% margin. This calculator shows the resulting margin automatically so you do not have to convert by hand.
What markup should I use?
It depends on your industry, overhead, and competition. Common retail markups run from 50% on to 100% (keystone pricing) or more, while groceries and electronics often use much lower markups. Choose a markup that covers all your costs and the profit you need, not just the cost of the item.
Does markup include overhead and other costs?
Only if you build them into your cost figure. Markup is applied to whatever you enter as the cost, so for a true picture include not just the purchase price but a share of shipping, handling, and overhead. Otherwise the markup may not leave the profit you expect.
Disclaimer: This calculator applies a markup to a single cost figure and does not account for overhead, taxes, or other operating expenses unless you include them in the cost. It is for educational purposes only and is not financial advice.