Markup Calculator

How to calculate markup

The markup formula is: Selling price = Cost × (1 + Markup% ÷ 100). The profit amount is: Profit = Selling price − Cost.

Worked example: 40% markup on a $75 item

Selling price = $75 × (1 + 40 ÷ 100) = $75 × 1.40 = $105. Profit = $105 − $75 = $30. Gross margin = $30 ÷ $105 = 28.6%. Note that the 40% markup and 28.6% margin describe the same $30 profit — just expressed against different bases.

Finding your markup from cost and selling price

If you already know both prices and need the markup percentage: Markup% = ((Selling price − Cost) ÷ Cost) × 100. A product that costs $24 and sells for $36: ($36 − $24) ÷ $24 × 100 = 50% markup. The gross margin on that same sale is $12 ÷ $36 = 33.3%.

Markup vs margin: what’s the difference?

This is one of the most commonly confused concepts in business pricing. Both use the same profit figure — they just express it as a percentage of different things.

The markup percentage will always be higher than the margin percentage for the same transaction. A 50% markup equals a 33.3% margin. A 100% markup equals a 50% margin. They converge only at 0% (no profit). Retailers and wholesalers typically think in markup; finance teams and analysts typically think in margin. For a dedicated margin calculator with target-price tools, see the profit margin calculator.

Typical markup rates by industry

Industry	Typical markup	Equivalent gross margin
Grocery / food retail	10–50%	9–33%
Electronics	20–40%	17–29%
Clothing / apparel	100–300%	50–75%
Restaurants (food cost)	200–500%	67–83%
Software / digital goods	Very high	70–90%+

Converting markup to margin

Formula: Margin = Markup ÷ (1 + Markup), using decimal form. For a 50% markup (0.50): 0.50 ÷ 1.50 = 0.333 = 33.3% margin. For 100% markup: 1.00 ÷ 2.00 = 50% margin. The reverse — converting a target margin to the required markup — is: Markup = Margin ÷ (1 − Margin). To achieve a 40% margin, you need a 66.7% markup (0.40 ÷ 0.60).

Pricing for a target margin vs a target markup

If your accountant gives you a target gross margin, you cannot just apply that percentage as a markup — they are different calculations. A 30% margin target requires: Selling price = Cost ÷ (1 − 0.30) = Cost ÷ 0.70. On a $70 cost, that is $70 ÷ 0.70 = $100 selling price, a 42.9% markup. Applying 30% markup instead gives $91, which only achieves a 23.1% margin — well short of target. When a discount is then applied on top, the discount + tax calculator shows the final price after both the reduction and any applicable tax; use the US state tax rates table to find the right rate. When a retailer layers a sale discount, a coupon code, and a loyalty reward together, the stacked discount calculator reveals the true combined percentage off.

Keystone markup

Keystone pricing is the retail practice of doubling the wholesale cost: a 100% markup, which produces a 50% gross margin. It is the traditional default in independent retail because it is simple to calculate and leaves enough margin to cover operating costs, returns, and markdowns. A product bought at $25 wholesale keystones to $50 retail. Many product categories have moved away from keystone as competition has intensified — electronics, for instance, typically run 20–40% markup rather than 100% — but it remains a useful benchmark for evaluating whether a supplier’s wholesale price is commercially viable for your business model.

Cost-plus pricing strategy

Cost-plus pricing is the most widely used pricing strategy in retail and manufacturing: set your selling price by applying a fixed markup percentage to your unit cost. Around 75% of companies use some form of cost-plus pricing because it is straightforward, ensures every unit sold covers its cost, and scales predictably across a product catalogue. The markup percentage is typically set based on industry norms, historical margins, or a target gross margin. Its main weakness is that it ignores demand — a product priced at cost + 50% will sell well if competitors charge cost + 80%, but poorly if customers perceive the value as lower than the price. When margins are tight or costs fluctuate, regularly recalculating your markup using the reverse calculator above ensures your pricing stays profitable.

Markup in practice: a worked pricing scenario

A small retailer sources a product for $18. They want to maintain at least a 45% gross margin. Required selling price = $18 ÷ (1 − 0.45) = $18 ÷ 0.55 = $32.73. That’s a 81.8% markup on cost. If they want to price it at a round $32.99, the actual margin is ($32.99 − $18) ÷ $32.99 = 45.4% — slightly above target and clean for the shelf label. Use the reverse calculator above to check any cost and selling price combination instantly.