What is markup?
The markup calculator above tells you how much you’re adding to a product’s cost to reach its selling price — and, crucially, shows the matching margin so you don’t confuse the two. Markup is the amount added to cost, expressed as a percentage of cost. It is the most intuitive pricing tool for anyone who buys or makes something and then sells it: start with what it cost you, add a markup, and you have your price.
The reason markup deserves its own calculator is the single most common pricing mistake in business: confusing markup with margin. They describe the same dollar of profit but against different bases, and mixing them up leads to systematic underpricing. A “50% markup” and a “50% margin” are not the same thing — and believing they are can quietly destroy profitability.
The formula
Profit = Price − Cost
Markup % = (Profit / Cost) × 100
Margin % = (Profit / Price) × 100 ← shown for comparison- Cost — what the item cost you to buy or produce.
- Selling price — what you charge the customer.
Markup divides profit by cost; margin divides the same profit by price. Because price is always larger than cost (when you’re profitable), the margin percentage is always smaller than the markup percentage.
Worked example
A product that costs $60 sold for $100:
Profit = $100 − $60 = $40
Markup = ($40 / $60) × 100 = 66.7%
Margin = ($40 / $100) × 100 = 40%The same $40 profit is a 66.7% markup but only a 40% margin. This gap is exactly where pricing errors happen. If someone wants a “40% profit” and applies a 40% markup to a $60 cost, they price at $84 — but that’s only a 28.6% margin, well short of the 40% they intended. The calculator shows both numbers side by side specifically to prevent this.
A useful mental conversion: a 50% markup equals a 33% margin; a 100% markup (doubling cost) equals a 50% margin; a 25% markup equals a 20% margin.
Benchmarks
Typical markups vary widely by industry:
- Retail: often 50–100% markup (keystone pricing — doubling cost — is a classic retail rule).
- Restaurants: food cost markups are very high (300%+) to cover labor and overhead.
- Manufacturing / wholesale: lower markups, often 15–50%, on higher volumes.
- Services: markup framing is less common; margin and hourly rate dominate instead.
There is no universal “correct” markup — it must cover not just cost but all your overhead and leave profit. That’s why markup should be set with margin and break-even in view, not in isolation.
How to interpret and use it
Use markup when you price up from a known cost — the natural workflow for resellers, retailers, and manufacturers. Use margin when you analyze profitability down from revenue. Both describe the same profit; the calculator gives you both so you can price in markup terms while understanding the margin implication.
The key discipline: decide your target in margin terms, then convert to the markup that achieves it. If you need a 40% margin to cover overhead and profit, you must apply a 66.7% markup — not a 40% markup. Pricing directly off a markup number that “sounds right” is how businesses end up with margins too thin to survive once overhead is counted.
Finally, remember markup only addresses the gap between cost and price on a single unit. Whether that markup makes the business profitable depends on volume and fixed costs — which is why the break-even calculator is the natural next step after setting your markup.
Frequently asked questions
What is markup? Markup is the amount added to the cost of a product to set its selling price, expressed as a percentage of cost. It equals profit divided by cost, multiplied by 100. A $60 item sold for $100 has a $40 profit and a 66.7% markup.
What is the difference between markup and margin? Markup is profit as a percentage of cost; margin is the same profit as a percentage of selling price. The same $40 profit on a $100 sale is a 66.7% markup but a 40% margin. Confusing the two is a common pricing error, so this calculator shows both.