Markup Calculator
Markup and margin are different numbers computed from the same two figures, and confusing them is one of the most expensive mistakes in retail and services. This calculator gives you selling price, markup percentage and gross margin together so you can price deliberately.
Inputs
Result
58
Gross margin 31.03%
How the markup calculator works
Markup % = (price − cost) ÷ cost × 100. It measures profit against what you paid.
Margin % = (price − cost) ÷ price × 100. It measures profit against what you charged, and is always the smaller number.
To price from a target margin: price = cost ÷ (1 − margin). A 40% margin on a 60 cost means 60 ÷ 0.6 = 100, not 60 × 1.4 = 84.
Worked example: cost 60, sold at 100
- Profit: 40.
- Markup = 40 ÷ 60 = 66.7%.
- Margin = 40 ÷ 100 = 40%.
- Pricing with a 40% markup instead would give 60 × 1.4 = 84, a margin of only 28.6%.
- On 500 units that mistake costs 8,000 of gross profit.
Common mistakes to avoid
Applying a target margin as a markup multiplier
The single most common pricing error. Divide by (1 − margin) instead of multiplying by (1 + margin), or you will systematically underprice.
Marking up on incomplete cost
Landed cost includes freight, duty, packaging and payment fees. Marking up on the invoice price alone erodes the margin you thought you set.
Using one markup across all lines
Slow-moving or high-service items carry more overhead per unit and need a higher markup than fast, self-service ones.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of price. A 100% markup is a 50% margin.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 66.7% markup is a 40% margin.
What markup is standard in retail?
Keystone pricing doubles cost, a 100% markup and 50% margin. Grocery runs far thinner, apparel often higher.
Should tax be included in the calculation?
No. Price your goods ex-tax and add sales tax or GST on top, or your margin will be computed on money that belongs to the tax authority.
How do discounts affect margin?
Directly and steeply. A 20% discount on a 40% margin item leaves a 25% margin, cutting profit per unit by nearly 40%.
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