Price Markup Calculator
Calculate the markup percentage and selling price for your products. Enter cost and desired markup to see your selling price.
A $40 cost with a 60% markup sells for $64.00 and produces a 37.5% margin — markup is measured against cost, margin against price, so the two figures are never the same number.
Calculator
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Markup vs Margin
Markup is calculated from cost, while margin is from selling price:
Markup % = (Price - Cost) / Cost × 100
A 50% markup on a $20 item gives a $30 selling price with a 33% profit margin.
Worked example
Using the defaults — a cost of $40 with a 60% markup:
Margin = (Price − Cost) ÷ Price
Apply the markup to cost. $40 × 1.60 = $64.00 selling price. The markup percentage is always calculated against cost.
Convert to a margin. ($64 − $40) ÷ $64 = 37.5%. A 60% markup is a 37.5% margin. The two numbers describe the identical outcome and are routinely confused.
Convert back the other way. To achieve a 37.5% margin from a $40 cost: $40 ÷ (1 − 0.375) = $64.00. The margin-to-price formula divides by (1 − margin); the markup formula multiplies by (1 + markup).
Find the ceiling. No cost above $64 can ever produce a 37.5% margin at that price. In fact no cost can produce a 100% margin at any positive price — margin approaches 100% only as cost approaches zero. Markup, by contrast, has no upper bound.
Enter 40 and 60 above to reproduce the $64.00 price and 37.5% margin. Markup and margin are different measures of the same profit.
Markup to margin conversion table
The relationship is not linear. The higher the markup, the wider the gap between the two figures.
| Markup | Selling price | Gross profit | Margin |
|---|---|---|---|
| 25% | $50.00 | $10.00 | 20.0% |
| 50% | $60.00 | $20.00 | 33.3% |
| 60% (default) | $64.00 | $24.00 | 37.5% |
| 100% | $80.00 | $40.00 | 50.0% |
| 200% | $120.00 | $80.00 | 66.7% |
| 400% | $200.00 | $160.00 | 80.0% |
A 100% markup is always exactly a 50% margin, regardless of cost. Every other pairing depends on the numbers. Never assume a markup is a margin.
Common mistakes with this calculation
- Treating markup and margin as the same number. A 60% markup is a 37.5% margin. Quoting the markup as the margin overstates profitability by 22.5 percentage points at this cost level, and the gap widens as markup rises.
- Marking up the selling price instead of the cost. Applying 60% to a target price of $64 gives $102.40, which is a 90.6% markup on the original cost. The markup base must be cost; applying it to price compounds the error.
- Setting markup from competitor prices without checking cost. Matching a competitor's price is only safe if your cost structure supports it. If their cost is $30 and yours is $40, a price that gives them a healthy margin gives you a loss.
- Ignoring that margin must cover more than cost of goods. A 37.5% gross margin has to absorb rent, salaries, marketing, payment processing and tax before it is profit. A markup set only to cover product cost will not produce a viable business.
When this calculator does not apply
- The calculator handles a single product with a single cost. Multi-product businesses need per-line analysis, and blended markups can hide loss-making lines.
- It does not account for volume effects. A higher price may reduce units sold by more than the margin gain.
- It excludes channel and platform fees, which are often percentage-based and therefore reduce the effective margin on the selling price rather than the cost.
- It models gross margin only. Operating expenses and tax are not included.
- It assumes a known, stable unit cost. Costs that vary with volume or exchange rates need a sensitivity analysis.
Frequently Asked Questions
What is a typical markup percentage?
Retail keystone markup is 100% (doubling the cost). Grocery items have 15-25%, clothing 100-200%, jewelry 200-400%.
Is markup the same as margin?
No. A 50% markup equals a 33% margin. A 50% margin equals a 100% markup. They are different calculations from different bases.
Sources & Methodology
This calculator uses standard financial formulas. See our methodology page for the full formula derivation.
- Pricing Your Products US Small Business Administration
- Small Business Financial Management US Small Business Administration
- Financial Statement Analysis US Securities and Exchange Commission
- Producer Price Index US Bureau of Labor Statistics
- Small Business Economic Profile SBA Office of Advocacy
Last reviewed .
Key takeaways
- A $40 cost with a 60% markup sells at $64 and produces a 37.5% margin.
- Markup is measured against cost; margin is measured against price. They are never the same number.
- A 100% markup is always a 50% margin, at any cost.
- Markup has no ceiling. Margin cannot reach 100% because cost cannot be zero.
- Gross margin must cover all operating costs before any of it becomes profit.