Markup Calculator
Calculate markup percentage, selling price, and cost from any two values.
Selling Price
$75.00
Price Breakdown
Common Industry Markups
Related Calculators
About This Calculator
A stunning 40% of small businesses fail due to pricing mistakes, with the most common error being confusion between markup and margin. If you think a 50% markup means 50% profit, you've already lost money. This Markup Calculator determines the correct selling price for any product by calculating markup from cost—the fundamental pricing calculation that every retailer, wholesaler, and business owner must master.
Enter your product cost and desired markup percentage to instantly find the selling price, or input cost and selling price to discover your actual markup. See the crucial difference between markup (based on cost) and margin (based on price), and avoid the calculation errors that sink businesses. Whether you're pricing products for retail, setting wholesale terms, or negotiating supplier deals, understanding markup is essential for profitability.
The markup concept dates back to ancient merchants who needed to price goods to cover travel costs, storage, and risk. Today, the math is the same but the stakes are higher—in a competitive marketplace, even small pricing errors compound into major profit losses. A product marked up "100%" yields only 50% gross margin, from which you must pay rent, salaries, marketing, and everything else.
How to Use the Markup Calculator
- 1Enter your product cost—what you pay to acquire or produce the item (include freight, handling, and any other direct costs).
- 2Enter your desired markup percentage OR the selling price you're considering.
- 3View the calculated selling price, profit per unit, and equivalent margin percentage.
- 4Compare with industry standard markups to ensure your pricing is competitive.
- 5Adjust the markup to find the optimal balance between competitiveness and profitability.
- 6Use the margin equivalent to understand how much of each sale becomes gross profit.
- 7Test different scenarios to set prices for various channels (retail, wholesale, online).
Formula
Selling Price = Cost × (1 + Markup%)The markup formula calculates selling price by adding a percentage of the cost to the cost itself. If you buy a product for $40 and want a 50% markup, the selling price is $40 × 1.50 = $60. The key distinction from margin: markup is based on cost, margin is based on selling price. That same $60 price on a $40 cost represents 50% markup but only 33.3% margin. This difference is critical—confusing the two is one of the most common and costly mistakes in business pricing.
The Markup Formula Explained
Core Markup Formulas:
Calculate Selling Price from Markup: Selling Price = Cost × (1 + Markup%)
Calculate Markup from Price: Markup % = ((Selling Price - Cost) / Cost) × 100
Calculate Profit per Unit: Profit = Selling Price - Cost = Cost × Markup%
Quick Reference Table:
| Markup % | Multiplier | $40 Cost Becomes | Margin % |
|---|---|---|---|
| 25% | 1.25 | $50 | 20% |
| 33.3% | 1.333 | $53.33 | 25% |
| 50% | 1.50 | $60 | 33.3% |
| 75% | 1.75 | $70 | 42.9% |
| 100% | 2.00 | $80 | 50% |
| 150% | 2.50 | $100 | 60% |
| 200% | 3.00 | $120 | 66.7% |
| 300% | 4.00 | $160 | 75% |
| 400% | 5.00 | $200 | 80% |
Step-by-Step Example:
You buy a product for $25 and want 60% markup:
- Markup multiplier: 1 + 0.60 = 1.60
- Selling price: $25 × 1.60 = $40
- Profit per unit: $40 - $25 = $15
- Margin: $15 / $40 = 37.5%
Finding Markup from Known Price: Product costs $35, selling for $56:
- Profit: $56 - $35 = $21
- Markup: $21 / $35 = 0.60 = 60%
Markup vs. Margin: The Critical Difference
The Most Expensive Mistake in Business
Confusing markup and margin costs businesses thousands—sometimes causing bankruptcy. They measure the same profit but from different perspectives:
Markup: Profit as percentage of COST Margin: Profit as percentage of SELLING PRICE
Same Example, Different Numbers:
- Cost: $60
- Selling Price: $100
- Profit: $40
| Metric | Calculation | Result |
|---|---|---|
| Markup | $40 / $60 | 66.7% |
| Margin | $40 / $100 | 40% |
The Dangerous Confusion: If you want 50% profit and think "markup" and "margin" are the same:
- Correct (50% margin): Cost $60 → Price $120
- Wrong (50% markup): Cost $60 → Price $90
That $30 error per unit at scale = bankruptcy.
Conversion Formulas:
| From | To | Formula |
|---|---|---|
| Markup | Margin | Margin = Markup ÷ (1 + Markup) |
| Margin | Markup | Markup = Margin ÷ (1 - Margin) |
Conversion Quick Reference:
| Markup | Margin |
|---|---|
| 20% | 16.7% |
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 66.7% | 40% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
| 300% | 75% |
Key Insight: Markup is unlimited (can exceed 1000%) while margin is capped at 100%. A 100% markup only produces 50% margin. This is why margin is preferred for financial analysis—it's bounded and intuitive.
Industry Standard Markups by Sector
What's "Normal" in Your Industry?
Markups vary dramatically by industry due to differences in overhead, inventory turn, competition, and value-add services.
Retail:
| Category | Typical Markup | Margin |
|---|---|---|
| Grocery/Supermarkets | 15-30% | 13-23% |
| Convenience Stores | 25-40% | 20-29% |
| Discount Retail | 15-25% | 13-20% |
| Department Stores | 50-100% | 33-50% |
| Specialty Clothing | 100-300% | 50-75% |
| Boutique Fashion | 200-500% | 67-83% |
| Jewelry | 100-400% | 50-80% |
| Furniture | 100-300% | 50-75% |
| Consumer Electronics | 30-50% | 23-33% |
| Auto Parts | 50-100% | 33-50% |
Restaurants:
| Category | Typical Markup | Margin |
|---|---|---|
| Food items | 200-400% | 67-80% |
| Soft drinks | 400-600% | 80-86% |
| Alcoholic drinks | 200-500% | 67-83% |
| Wine by bottle | 150-300% | 60-75% |
| Wine by glass | 400-700% | 80-88% |
| Coffee | 300-500% | 75-83% |
Services:
| Category | Typical Markup | Margin |
|---|---|---|
| Auto repair (parts) | 50-100% | 33-50% |
| Auto repair (labor) | 100-200% | 50-67% |
| Home services | 50-100% | 33-50% |
| Professional services | 100-300% | 50-75% |
| IT/Tech consulting | 100-200% | 50-67% |
Why Such Wide Variation:
- High turnover businesses (grocery) need lower markup but sell more volume
- Specialty/luxury items justify higher markup through exclusivity
- High overhead (restaurants, boutiques) requires higher markup to cover costs
- Fast-changing inventory (fashion, tech) needs higher markup to cover markdown risk
Keystone Pricing and Pricing Strategies
Keystone Pricing: The Classic Standard
"Keystone" = 100% markup (2x cost)
Origin: Named after architectural keystones—the essential stone that holds an arch together. Keystone markup was considered the minimum "essential" to hold a retail business together.
Example:
- Product cost: $45
- Keystone price: $45 × 2 = $90
- Markup: 100%
- Margin: 50%
When Keystone Works:
- Moderate competition
- Standard product categories
- Reasonable overhead (25-35% of revenue)
- Normal inventory turnover
- Established consumer expectations
Common Pricing Strategies:
| Strategy | How It Works | Best For |
|---|---|---|
| Keystone | 2x cost (100% markup) | General retail |
| Triple Keystone | 3x cost (200% markup) | Specialty/boutique |
| Competitive | Match competitor prices | Price-sensitive markets |
| Value-Based | Price on customer value | Unique products |
| Cost-Plus | Fixed % above all costs | Consistent margins |
| Dynamic | Adjust by demand | E-commerce, airlines |
Below Keystone (Lower Markup):
- High-volume items
- Commoditized products
- Price-sensitive customers
- Loss leaders (traffic drivers)
- Clearance/markdown items
Above Keystone (Higher Markup):
- Specialty/exclusive items
- High service component
- Limited competition
- High overhead locations
- Slow-moving inventory
- Risk of obsolescence
Psychological Pricing:
- $99 vs. $100 (charm pricing)
- $97 vs. $99 (seems more calculated)
- $9.99 vs. $10.00 (retail standard)
- Premium pricing signals quality
Wholesale vs. Retail Markup
Understanding the Distribution Chain
Products typically pass through multiple hands, each adding markup:
Typical Distribution Chain:
| Stage | Cost | Markup | Selling Price |
|---|---|---|---|
| Manufacturer | $10 production | 25% | $12.50 |
| Wholesaler | $12.50 cost | 20% | $15.00 |
| Distributor | $15.00 cost | 33% | $20.00 |
| Retailer | $20.00 cost | 100% | $40.00 |
The $10 product becomes $40—a 300% cumulative markup, but each step has modest individual markup.
Wholesale Markup Guidelines:
| Business Type | Typical Wholesale Markup |
|---|---|
| Manufacturer to Distributor | 15-30% |
| Distributor to Retailer | 20-40% |
| Importer to Wholesaler | 25-50% |
| Direct Wholesale (manufacturer) | 40-60% |
Retail Markup Guidelines:
| Business Type | Typical Retail Markup |
|---|---|
| Big Box Stores | 30-50% |
| General Retail | 50-100% |
| Specialty Retail | 100-200% |
| Boutique/Luxury | 200-400%+ |
Suggested Retail Price (MSRP/SRP):
Manufacturers often set MSRP to:
- Protect brand image
- Ensure retailer profitability
- Prevent price wars
- Maintain channel harmony
MAP (Minimum Advertised Price): Some manufacturers enforce minimum prices retailers can advertise, though retailers can sell below MAP in-store.
Direct-to-Consumer (DTC) Impact: Brands selling direct can capture full retail margin:
- Traditional: Manufacturer → Retailer → Consumer (you get wholesale price)
- DTC: Manufacturer → Consumer (you get full retail minus shipping)
This is why DTC brands often offer "lower" prices that are still highly profitable.
Calculating Markup with Overhead
True Cost = Product Cost + Allocated Overhead
Many businesses fail because they markup only product cost without accounting for overhead.
Full Cost Calculation:
| Cost Component | Amount | % of Revenue |
|---|---|---|
| Product Cost | $40.00 | 40% |
| Shipping/Handling | $3.00 | 3% |
| Payment Processing | $3.00 | 3% |
| Returns Reserve (5%) | $5.00 | 5% |
| Warehousing | $2.00 | 2% |
| Marketing/CAC | $15.00 | 15% |
| Overhead Allocation | $12.00 | 12% |
| Total True Cost | $80.00 | 80% |
| Required Price | $100.00 | 100% |
| True Margin | $20.00 | 20% |
The Markup Illusion:
- Product cost: $40
- Selling price: $100
- "Markup" on product: 150%
- "Margin" on product: 60%
- Actual margin after all costs: 20%
Breakeven Markup Formula: Minimum Markup = (Overhead %) ÷ (1 - Overhead %)
Example: 40% overhead requires: Minimum Markup = 0.40 ÷ 0.60 = 66.7% just to break even
Overhead Components to Include:
- Rent and utilities
- Employee wages and benefits
- Insurance
- Marketing and advertising
- Software and subscriptions
- Shipping supplies and freight
- Returns and damages
- Payment processing fees
- Inventory carrying costs
- Depreciation
Target Net Profit: After covering overhead, what profit do you want?
For 10% net margin with 40% overhead:
- Gross margin needed: 50%
- Markup needed: 100%
- Price of $40 product: $80
Dynamic Markup Strategies
When to Adjust Markup
Smart businesses use different markups in different situations:
By Product Category:
| Category | Markup Strategy | Reason |
|---|---|---|
| Staples/basics | Lower (30-50%) | Traffic drivers |
| Popular items | Standard (50-100%) | Volume + margin |
| Specialty items | Higher (100-200%) | Limited competition |
| Accessories | Higher (150-300%) | Impulse, small ticket |
| Private label | Higher (100-150%) | No competition |
| Clearance | Negative to 25% | Clear inventory |
By Channel:
| Channel | Typical Markup | Why |
|---|---|---|
| Retail store | 100% | Full service, overhead |
| E-commerce | 75% | Lower overhead |
| Wholesale | 20-40% | Volume, no service |
| Amazon/marketplaces | 50-75% | Fees eat margin |
| Direct to consumer | 100-150% | No middleman |
By Season:
| Period | Strategy |
|---|---|
| Peak season | Full markup, may increase |
| Off-season | Reduced markup promotions |
| End of season | Progressive markdowns |
| Pre-season | Teaser pricing (full markup) |
By Customer Type:
| Customer | Pricing Approach |
|---|---|
| Retail | Full markup |
| Trade/wholesale | 30-50% discount from retail |
| Volume buyers | Tiered discounts |
| Loyal customers | Member pricing |
| New customers | Acquisition discounts |
Markdown Strategy:
| Week | Markdown | Original $100 Item |
|---|---|---|
| 1-2 | 0% | $100 |
| 3-4 | 20% | $80 |
| 5-6 | 40% | $60 |
| 7+ | 50-70% | $30-50 |
| Clearance | 70-90% | $10-30 |
The goal: sell at highest possible price before heavy markdown.
Pro Tips
- 💡Never confuse markup (% of cost) with margin (% of price). 100% markup = 50% margin. Write conversion charts until this becomes automatic—mixing them up is the costliest pricing error.
- 💡Calculate your true break-even markup by including ALL overhead, not just product cost. If overhead is 40% of revenue, you need 67% markup minimum just to break even.
- 💡Use keystone (100% markup) as a starting point, then adjust based on competition, value, and overhead. It's a benchmark, not a rule.
- 💡Different products should have different markups. Use lower markup on traffic drivers and commodities; higher markup on specialty and impulse items.
- 💡When costs increase, recalculate pricing immediately. Small cost increases compound—a 5% cost increase requires a 7.5% price increase to maintain 50% margin.
- 💡Track your actual margins monthly by category. You may discover certain products or categories are far less profitable than you assumed.
- 💡For Amazon and marketplace selling, calculate markup AFTER platform fees. A product that looks like 100% markup may be only 20% margin after 35% Amazon fees.
- 💡Consider psychological pricing: $97 instead of $100, $49.95 instead of $50. The margin difference is negligible but conversion can improve.
- 💡Review and adjust markups seasonally. What sells at full price in December may need markdown in January. Plan markdown budgets into your pricing.
- 💡When discounting, know your floor. Calculate the minimum price that still covers variable costs—below that point, you lose money on every sale.
Frequently Asked Questions
"Good" depends on your industry and overhead. General retail typically uses 50-100% markup (keystone). Specialty stores may use 100-200%+. The key is whether your markup covers ALL costs (not just product cost) and leaves adequate profit. Calculate your true break-even markup: if overhead is 40% of revenue, you need at least 67% markup just to break even. Add desired profit on top. Always compare to industry benchmarks and competitors.
