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Markup calculator
Markup is how much you add to what an item cost you in order to set its selling price, written as a percentage of that cost. Enter the cost price and the markup you want, and this tool returns the selling price, the cash profit on each unit, and the margin that the same sale represents. The distinction matters because markup and margin are two ways of describing one profit, measured against different numbers, and confusing them is one of the most common pricing mistakes in small business. A 50 percent markup does not give you a 50 percent margin; it gives a 33.3 percent margin, because the markup is figured on the smaller cost while the margin is figured on the larger price. This calculator is for anyone setting prices: a retailer pricing stock, a maker costing a product, a tradesperson quoting materials, or a freelancer marking up an expense. It deals in gross figures, the difference between cost and price before any overheads, so the number it shows is the starting profit, not the money left at the end.
Markup is the profit measured against what an item cost you. A 40 percent markup adds 40 percent of the cost on top to set the price. The margin shown alongside is the same profit measured against the selling price, which is always the lower of the two percentages, so quote whichever your trade uses and do not mix them.
How it works
- Enter the cost price, what the item costs you to buy or make.
- Enter the markup percentage you want to add on top of that cost.
- The tool adds that percentage of the cost to the cost itself to give the selling price.
- It then shows the cash profit per unit, which is the price minus the cost.
- Alongside the markup it shows the equivalent margin, the same profit expressed as a share of the selling price, so you can quote either figure correctly.
price = cost x (1 + markup / 100); profit = price - cost
Markup is expressed as a fraction of the cost, so multiplying the cost by one plus that fraction gives the selling price in a single step. The profit is the gap between the price and the cost. To express that profit as a margin instead, divide it by the selling price rather than the cost. The two percentages describe the same money: the markup answers how much you added relative to what you paid, the margin answers how much of what you charged is profit.
- cost
- what the item cost you to buy or make
- markup
- the percentage added on top of the cost
- price
- the selling price after the markup
- profit
- price minus cost, before overheads
A markup and the margin it really gives
| 20% markup | 16.7% margin | common in fast-moving retail |
| 50% markup | 33.3% margin | a frequent rule of thumb |
| 100% markup (keystone) | 50% margin | doubling the cost |
| 300% markup | 75% margin | typical of bar drinks |
Worked example
An item costs you 50 to buy and you apply a 40 percent markup: the selling price is 70, because 40 percent of 50 is 20 added on top. The profit per unit is 20. That same 20 is a 28.6 percent margin, since 20 divided by the 70 price is lower than 20 divided by the 50 cost. Quoting it as a 40 percent margin would overstate what you keep.
Key facts
- Markup is always a larger percentage than the margin for the same sale, because cost is smaller than price.
- Doubling the cost, a 100 percent markup known in retail as keystone pricing, produces exactly a 50 percent margin.
- A markup can exceed 100 percent, but a margin can never reach 100 percent, since you cannot keep more than the whole selling price.
- Pricing on markup alone can leave a business short if overheads are high, which is why many firms set prices to hit a target margin instead.
Tips
- Decide whether your trade talks in markup or margin and stick to it, because mixing the two understates or overstates your profit.
- Set the markup high enough to cover overheads and the profit you want, not just the cost of the goods.
- Add VAT or sales tax after the markup, since it is passed to the tax authority and is not part of your profit.
- Review markups when supplier costs change, so a rise in the cost price does not quietly shrink your margin.
Frequently asked questions
What is the difference between markup and margin?+
Markup is profit measured against cost; margin is the same profit measured against the selling price. Because the price is always higher than the cost, the margin percentage is always lower than the markup for the same sale.
How do I turn a markup into a margin?+
Divide the markup by one plus the markup, both as decimals. A 40 percent markup is 0.40 divided by 1.40, which is 0.286, or a 28.6 percent margin. This tool does the conversion for you.
What markup should I use?+
It depends on the trade. Grocery runs on thin markups of a few percent, fashion and gifts often double the cost or more, and hospitality marks up drinks heavily. Cover your overheads and target profit, not just the cost of the item.
Does markup include VAT or sales tax?+
No. Markup is applied to the cost to set a pre-tax price. Add VAT or sales tax on top of the selling price afterwards, since that money is collected for the tax authority, not kept as profit.
Is this gross or net profit?+
Gross. The profit shown is price minus cost only. Rent, wages, packaging, payment fees and tax all come out of it, so the money you actually keep is less.
Things to watch
- The profit shown is gross, before rent, wages, fees and tax, so it overstates the money you ultimately keep.
- A healthy-looking markup can still mean a loss once overheads are spread across the units you actually sell.
- Do not read the markup percentage as a margin; on a 100 percent markup that mistake would double your apparent margin.
Last updated: 2026
This is an estimate for general guidance, not financial, tax, legal or medical advice. Figures can change and individual circumstances vary. Always confirm with the official sources listed before making decisions.
Reviewed by Vikas Dulgunde. Editorial standards.