Markup Calculator

How this is worked out

Markup is profit measured against what the item cost you:

price = cost × (1 + markup ÷ 100)

Margin is the same profit measured against what you sold it for:

margin = profit ÷ price × 100

Same money, two different denominators, two very different numbers. A 60% markup is a 37.5% margin. A 100% markup is a 50% margin. They are never equal and margin is always the smaller of the two.

This trips up a lot of small businesses, and it usually goes the same way: someone wants a 40% margin, applies a 40% markup, and quietly earns a 28.6% margin instead. Over a year, on every item sold, that is a serious amount of money that was never priced in.

To go the other way — from a margin you want to the markup you must apply:

markup = margin ÷ (100 − margin) × 100

So a 40% margin needs a 66.7% markup.

A worked example

An item costs you 40 and you add 60% markup:

• Selling price: 64
• Profit: 24
• Margin: 37.5%

Now suppose you actually wanted a 60% margin. Applying 60% markup gets you nowhere near it. You would need a markup of 150% — a selling price of 100 — to keep 60 of every 100 as profit.

You want this margin	You must apply this markup
20%	25%
30%	42.9%
40%	66.7%
50%	100%
60%	150%

What this doesn't cover

• "Cost" here means the direct cost of one unit — materials, manufacture, packaging, shipping in. Rent and salaries are fixed costs and belong in the break-even calculation instead, not in the markup.
• Payment processing fees and marketplace commissions come out of the selling price, so a 2% card fee is roughly 2 percentage points off your margin. Include them in cost if you want the true figure.
• This is per unit. It says nothing about whether you sell enough units to cover your fixed costs — that is the break-even calculator.

Common questions