Markup Calculator
Enter your cost and markup percentage to instantly see the selling price, gross profit, and the resulting profit margin — they are not the same number, and the difference matters.
Note: markup is the percentage added to cost; margin is profit as a percentage of the selling price. They are different — a 50% markup gives a 33.3% margin, not 50%.
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How to Calculate Markup
Markup is the amount added to a product's cost to arrive at its selling price, expressed as a percentage of that cost. If you buy a product for $80 and sell it for $120, your markup is $40 ÷ $80 = 50%. The formula is:
Selling price = Cost × (1 + Markup% ÷ 100)
So a $200 widget with a 40% markup sells for $200 × 1.40 = $280, generating $80 gross profit. Simple enough — but the number that trips people up is the margin.
Markup vs. Margin — Not the Same Thing
Markup measures profit relative to cost. Margin measures the same profit relative to the selling price. Same dollars, different denominators — so the percentages diverge.
Example: Cost = $100, Markup = 50%, Selling price = $150, Profit = $50.
- Markup % = $50 ÷ $100 = 50%
- Margin % = $50 ÷ $150 = 33.3%
Quoting a "50% margin" when you mean "50% markup" overstates profitability by a meaningful amount — a common source of confusion in pricing conversations and financial reports.
Markup-to-Margin Conversion at Common Rates
The relationship between markup and margin follows the formula Margin = Markup ÷ (100 + Markup) × 100. Here are the most common values:
- 20% markup → 16.7% margin
- 25% markup → 20.0% margin
- 30% markup → 23.1% margin
- 50% markup → 33.3% margin
- 100% markup → 50.0% margin
- 200% markup → 66.7% margin
To go the other way — from a target margin to the required markup — use Markup = Margin ÷ (100 − Margin) × 100. If you need a 40% gross margin, you must mark up costs by 40 ÷ 60 × 100 = 66.7%.
Typical Markup Rates by Industry
There is no universal "right" markup — it depends on competition, perceived value, and how much overhead sits between gross profit and net profit. That said, some benchmarks are widely cited:
- Retail clothing and accessories: 100–200% (keystone and above), because shrinkage, returns, and markdown clearance eat into gross margin.
- Grocery and food retail: 10–30%, driven by high volume and razor-thin operating margins.
- Freelance services: 30–100% over direct labour cost, depending on expertise and local market rates.
- Software / digital products: 200–500%+ once development cost is recovered, since marginal cost per unit is near zero.
- Construction trades: 20–50% over materials plus labour, though project risk and payment timing matter.
These are rough norms, not guarantees. Always check that your selling price covers all fixed and variable costs — overhead, payment processing, returns, and your own salary — before committing to a markup rate.
Once you know your selling price, put it on a professional invoice with our free invoice generator. Need to add sales tax on top? Sales Tax Calculator has you covered.
Frequently Asked Questions
What is the difference between markup and margin?
Markup is the amount added to cost expressed as a percentage of cost. Margin is profit expressed as a percentage of the selling price. A 50% markup on a $100 cost gives a $150 selling price and $50 profit — but the profit margin is $50 ÷ $150 = 33.3%, not 50%. The two numbers describe the same profit from different reference points.
How do I calculate the selling price from cost and markup?
Multiply the cost by (1 + markup% ÷ 100). For example, a $200 cost with a 30% markup gives $200 × 1.30 = $260 selling price. The $60 difference is your gross profit before operating expenses.
How do I convert a markup percentage to a margin percentage?
Margin% = markup% ÷ (100 + markup%) × 100. A 25% markup converts to 25 ÷ 125 × 100 = 20% margin. Going the other way: markup% = margin% ÷ (100 − margin%) × 100. A 20% margin converts to 20 ÷ 80 × 100 = 25% markup.
What markup percentage should I use?
It depends on your industry and cost structure. Retail commonly uses 50%–100% (known as keystone pricing). Software and digital products often carry 200%–500% or more because marginal costs are near zero. Service businesses might target 30%–60% over direct labour costs. The key question is whether the resulting price covers all your overhead and still leaves net profit.
Does this calculator include taxes in the selling price?
No. The selling price shown is pre-tax. If your customers pay sales tax or VAT on top of that price, you add those separately. Use our Sales Tax Calculator or VAT Calculator alongside this tool if needed.