Markup Calculator
Markup and Margin Are Not the Same Number
Confusing markup with margin is one of the most common pricing mistakes in retail, and it's an easy one to make since both describe profit as a percentage. The difference is the denominator: markup measures profit against cost, margin measures it against price. A 100% markup sounds aggressive, but it only produces a 50% margin — a gap that has caused more than a few sellers to underprice a product without realizing it.
The Formula
Because markup is anchored to cost rather than price, it tends to look larger than the margin figure for the same product — markup has no ceiling, while margin always stays below 100%.
Where Markup Is the Right Tool
- Cost-plus pricing — many wholesale and manufacturing businesses set prices as a fixed markup over cost, since cost is the number they control directly.
- Supplier and vendor negotiation — markup shows immediately how much cushion exists between what's paid for a product and what it sells for.
- Cross-checking margin targets — if a finance team specifies a target margin, converting it to the equivalent markup is often the more intuitive number for a merchandising team pricing individual SKUs.
Markup Converted to Margin
| Markup | Equivalent margin |
|---|---|
| 10% | 9.09% |
| 25% | 20.00% |
| 50% | 33.33% |
| 66.67% | 40.00% |
| 100% | 50.00% |
| 150% | 60.00% |
| 200% | 66.67% |
Every markup percentage corresponds to a lower margin percentage — the two only converge as they approach 0%. Values above are computed directly from the mathematical relationship between the two metrics.
How to Use This Calculator
- Enter the Cost per Unit.
- Enter the Selling Price.
- Select Calculate to get the markup percentage and profit per unit.
Related Calculations
See the same numbers expressed as margin instead with the Product Margin Calculator, or find the sales volume a given markup needs to hit with the Break-Even Sales Calculator.