Markup Calculator
This markup calculator takes any two of cost, markup percentage, selling price and profit, then solves for the rest and reports the gross margin alongside them. That last number is where most pricing mistakes hide.
Fill in any two boxes. The other two are solved for you.
How to use the markup calculator
- Fill in any two fields. Cost and markup, cost and price, price and profit, markup and profit — any pair works. The remaining two are solved as you type.
- Read the gross margin. It appears next to the markup. These are two different numbers describing the same sale, and mixing them up is the usual source of a price that looks fine and earns less than planned.
- Check the bar. The selling price is drawn as a stacked bar of cost plus profit, so you can see at a glance what share of the ticket price you keep.
- Work backwards if you need to. Enter a selling price you are stuck with and the profit you need, and the calculator tells you the cost you have to buy at.
Every figure here is gross: the sale price against the direct cost of the item. Rent, wages, shipping and card fees are not in it.
The markup formula
Rearranged for each unknown:
- Selling price =
cost × (1 + markup ÷ 100) - Cost =
price ÷ (1 + markup ÷ 100) - Profit =
price − cost, orcost × markup ÷ 100 - Gross margin % =
(price − cost) ÷ price × 100
The profit in dollars is identical in both the markup and margin formulas. Only the denominator changes. Markup divides by cost; margin divides by price. Because price is always larger than cost on a profitable sale, the margin percentage is always the smaller of the two.
Worked examples
Example: cost $40, markup 65%
Two inputs, and the other three fall out.
You sell at $66, keep $26, and that $26 is 39.39% of the ticket price even though it is 65% of the cost.
Example: you know the price and the cost
An item lands at $55 and you sell it for $99.
80% markup, 44.44% margin. Same sale, same $44, two very different-looking percentages.
Example: you know the profit and the markup
You need $30 of gross profit per unit and you always run a 60% markup.
You have to buy at $50 or better and sell at $80.
Markup and margin are not the same number
Markup measures profit against cost. Margin measures the same profit against the selling price. A supplier quoting you “50%” and a bookkeeper reporting “50%” may be describing completely different sales.
The conversion works both ways, and neither direction is a subtraction:
markup = margin ÷ (1 − margin)
| Markup | Gross margin | Buy at $20, sell at |
|---|---|---|
| 10% | 9.09% | $22.00 |
| 20% | 16.67% | $24.00 |
| 25% | 20.00% | $25.00 |
| 30% | 23.08% | $26.00 |
| 40% | 28.57% | $28.00 |
| 50% | 33.33% | $30.00 |
| 60% | 37.50% | $32.00 |
| 75% | 42.86% | $35.00 |
| 100% | 50.00% | $40.00 |
| 150% | 60.00% | $50.00 |
| 200% | 66.67% | $60.00 |
| 300% | 75.00% | $80.00 |
Read it in the other direction and the asymmetry is even clearer. To hit a 50% margin you need a 100% markup. To hit a 60% margin you need a 150% markup. To hit a 75% margin you need a 300% markup. Markup has no ceiling; margin can never reach 100%, because the cost never disappears from the price.
| Target margin | Markup required | Multiply cost by |
|---|---|---|
| 10% | 11.11% | 1.111 |
| 20% | 25.00% | 1.250 |
| 25% | 33.33% | 1.333 |
| 30% | 42.86% | 1.429 |
| 40% | 66.67% | 1.667 |
| 50% | 100.00% | 2.000 |
| 60% | 150.00% | 2.500 |
| 70% | 233.33% | 3.333 |
Pricing to hit a target margin
If you have a margin you must hit, do not add the margin percentage to the cost. Divide instead.
Example: cost $18, target margin 40%
Sell at $30. Adding 40% to the cost instead gives 18 × 1.40 = $25.20, and the margin on that is 7.20 ÷ 25.20 = 28.57% — well short of the 40% you were aiming for.
That shortfall is the same in every case, and it is why the “add the percentage” habit quietly costs money. On a $30 target margin item the gap is $4.80 per unit. It is the same structural error as adding a percentage back on to reverse a discount, which the reverse percentage calculator covers from the other side.
What a discount does to the margin
Discounts come out of profit, not out of cost, so a small discount eats a large slice of margin. Take the $18 cost item priced at $30 with a 40% margin. Run a 20% off promotion and the price drops to $24. Profit falls from $12 to $6, and the margin falls from 40% to 25%. A 20% discount cut the profit in half. Use the percent off calculator to price the promotion, then bring the discounted price back here to see what it leaves you.
Keystone pricing and its variants
Keystone pricing is the shorthand rule of doubling the wholesale cost to get the retail price. Doubling is a 100% markup, which is exactly a 50% margin. Buy at $24, sell at $48, keep $24.
It survives because it is easy to do in your head and because a 50% margin leaves room for the costs that never appear on the invoice: markdowns at the end of the season, shrinkage, returns, card processing, and the shelf space the item occupied while it sat there.
Variants you will hear described the same way:
- Half keystone — cost × 1.5, a 50% markup and a 33.3% margin.
- Keystone plus — cost × 2, then a further increase to land on a price point like $49.99 rather than $48.00.
- Triple keystone — cost × 3, a 200% markup and a 66.7% margin, common where the item is small, slow-moving or heavily discounted later.
Keystone is a starting point, not a rule. What an item can actually be sold for depends on the item and the buyer, and no formula settles that. What the formula does settle is what a given price leaves you, which is the part you can be exact about.
Common mistakes
- Adding the margin to the cost. To get a 40% margin, divide the cost by 0.60. Multiplying by 1.40 gives 28.57%.
- Quoting a markup as a margin. If you tell a lender you run a 60% margin when you mean a 60% markup, the real margin is 37.5%.
- Subtracting to convert. A 100% markup is not a 0% margin and a 25% markup is not a 25% margin. Use
markup ÷ (1 + markup). - Treating gross margin as profit. Gross margin covers rent, wages and everything else before anything is left over.
- Leaving landed cost out. Freight, duty and packaging belong in the cost figure. A $40 item with $6 of freight has a real cost of $46, and the markup you thought was 65% is 43.5%.
- Discounting without rechecking. A 20% discount on a 40% margin item cuts the profit per unit in half.
- Averaging percentages across products. Percentages from different cost bases do not average. Total the dollars of profit and the dollars of revenue, then divide once.
Once the price is set, the last check is what it looks like on the shelf next to a different pack size. The unit price calculator puts competing sizes on one per-unit basis.
Frequently asked questions
What is a 40% markup on $25?
The selling price is $35. Multiply the cost by 1 + 0.40: 25 × 1.40 = 35. The profit is $10. That $10 is 40% of the $25 cost, but only 28.57% of the $35 price, so the gross margin is 28.57%. If you needed a 40% margin instead, you would price at 25 ÷ 0.60 = $41.67.
What is the markup if the cost is $12 and the price is $30?
150%. The profit is 30 − 12 = $18, and 18 ÷ 12 = 1.50, which is 150% of the cost. The gross margin on the same sale is 18 ÷ 30 = 60%. This is the pair that trips people up most often: 150% markup and 60% margin describe exactly the same $18.
Is a 50% markup the same as a 50% margin?
No. A 50% markup gives a 33.3% margin. Buy at $20, add 50%, and the price is $30; the $10 profit is a third of $30. To reach a 50% margin you need a 100% markup, selling that $20 item at $40. Use margin = markup ÷ (1 + markup) to convert.
How do I price something to hit a 30% margin?
Divide the cost by 0.70. A $21 cost gives 21 ÷ 0.70 = $30, a $9 profit, and 9 ÷ 30 = 30%. That is a 42.86% markup. Adding 30% to the cost instead would give $27.30 and a margin of only 23.08%, which is the standard way businesses underprice.
What is keystone pricing?
Doubling the cost to set the retail price. It is a 100% markup and a 50% margin, so an item bought at $24 sells at $48. Half keystone is cost × 1.5 and triple keystone is cost × 3, a 66.7% margin. It is a quick starting point rather than a rule about what any item should sell for.
Can markup be more than 100%?
Yes, and often is. A 200% markup means selling at three times cost: $15 becomes $45. Markup has no upper limit because the denominator is the cost. Margin does have a limit — it approaches 100% but never reaches it, since the cost is always part of the price you charge.
How do I convert a margin back to a markup?
Divide the margin by one minus the margin, both as decimals. For a 45% margin: 0.45 ÷ 0.55 = 0.818, an 81.8% markup. Checking with round numbers helps — a 50% margin gives 0.50 ÷ 0.50 = 1, a 100% markup, which is the doubling rule you already know.
What is the difference between gross margin and net margin?
Gross margin is the sale price minus the direct cost of the item, as a percentage of the price. Net margin subtracts everything else too: rent, wages, shipping, fees, tax. This page works in gross figures only, so a healthy number here does not by itself mean the sale is profitable overall.
How do I work out the cost if I know the price and the markup?
Divide, do not subtract. Cost = price ÷ (1 + markup). A $90 item at a 125% markup cost 90 ÷ 2.25 = $40. Subtracting 125% of $90 makes no sense, and subtracting a plain 125 would be worse. Enter the price and the markup and the cost and profit are solved for you.
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