Formula Guide

How to Calculate Markup — Markup Formula & Margin Explained

Markup is the percentage added to a product's cost to determine its selling price. It's one of the most important concepts in pricing strategy. The markup formula is: (Selling Price − Cost) ÷ Cost × 100. Critically, markup is different from profit margin — a common source of confusion in business.

Markup vs Margin — Key Formulas

Markup (based on COST)

Markup % = ((Price − Cost) ÷ Cost) × 100

Cost $40, Price $60 → Markup = 50%

Margin (based on PRICE)

Margin % = ((Price − Cost) ÷ Price) × 100

Cost $40, Price $60 → Margin = 33.3%

Selling Price from Markup

Selling Price = Cost × (1 + Markup ÷ 100)

Quick Markup Calculator

Cost Price ($)

Markup (%)

Selling Price

$60.00

Gross Profit

$20.00

Margin

33.3%

Open Full Markup Calculator

Markup to Margin Conversion Table

Markup %	Margin %	Sell Price (on $100 cost)
10%	9.1%	$110
20%	16.7%	$120
25%	20%	$125
33%	24.8%	$133
50%	33.3%	$150
75%	42.9%	$175
100%	50%	$200
200%	66.7%	$300

Frequently Asked Questions

What is the difference between markup and margin?

Markup is calculated on cost: (Price − Cost) ÷ Cost × 100. Margin is calculated on price: (Price − Cost) ÷ Price × 100. A 50% markup equals a 33.3% margin. They are NOT the same number.

What markup percentage should I use?

It depends on your industry. Retail typically uses 50–100% markup (keystone pricing). Restaurants use 200–400%. Software/SaaS can be 500%+. The right markup covers costs, overhead, and desired profit.

How do I convert markup to margin?

Margin = Markup ÷ (1 + Markup). Example: 50% markup → 50 ÷ 150 = 33.3% margin. Or: Markup = Margin ÷ (1 − Margin).

What is keystone pricing?

Keystone pricing is a retail strategy of doubling the wholesale cost (100% markup). A product that costs $25 wholesale sells for $50 retail. It's a simple rule of thumb but may not work for all products.

Can markup be over 100%?

Yes, absolutely. A 200% markup means you're selling at 3× your cost. Luxury goods, software, and specialty products often have markups of 200–1000%.

Related Tools

Break-Even Calculator

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