Set a selling price from your cost and markup percentage, and see the profit and the equivalent profit margin, or find the markup from a cost and price.
How markup works
Selling price = cost × (1 + markup ÷ 100)
Markup = (price − cost) ÷ cost × 100
Worked example
An item costs $30. With a 40% markup, the selling price is $30 × 1.40 = $42, a profit of $12 per unit. The profit margin is $12 ÷ $42 = 28.6%, lower than the markup percentage.
Markup to margin conversion
| Markup | Margin |
|---|---|
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 100% (keystone) | 50% |
| 200% | 66.7% |
Margin = markup ÷ (1 + markup)
Markup = margin ÷ (1 − margin)
Choosing a markup
- Cover all costs: your markup has to pay for overheads such as rent, staff and marketing, not just product cost.
- Check the market: competitors' prices and the value customers see matter as much as your costs.
- Retail "keystone" pricing (doubling the cost, a 100% markup) is a traditional starting point in many shops.
Frequently asked questions
Is markup or margin better to use?
Both are useful. Markup is convenient for setting prices from costs; margin is better for understanding profitability and comparing with other businesses.
Should shipping be part of cost?
Yes. Include every cost of getting the product ready to sell, such as freight and packaging.
Related tools
Results are estimates for planning and education. They are not accounting, tax or legal advice. Check important figures with a qualified accountant.