Markup Calculator
Calculate selling price, markup percentage, and profit from your cost basis
Markup Formulas
What is Markup?
Markup is the percentage added to the cost of a product to determine its selling price. It's one of the most fundamental concepts in pricing strategy, used by retailers, wholesalers, and service providers worldwide. Unlike profit margin (which is based on selling price), markup is calculated as a percentage of your cost.
For example, if a product costs you $50 and you apply a 100% markup, the selling price becomes $100. The markup represents how much you're adding on top of your cost to cover overhead expenses and generate profit.
Understanding markup is essential for setting profitable prices while remaining competitive. A markup that's too low won't cover your expenses, while one that's too high may drive customers to competitors.
Markup vs Margin Explained
The terms markup and margin are often used interchangeably, but they calculate profit differently. This distinction is critical for accurate pricing and financial reporting.
Markup
Based on COST. A 50% markup on $100 cost = $150 price ($50 profit).
Margin
Based on PRICE. That same $150 sale has a 33.3% margin ($50 profit).
Common Mistake
A 50% markup does NOT equal 50% margin. Always convert between them carefully.
Conversion Formula
Margin = Markup / (1 + Markup). Example: 0.50 / 1.50 = 33.3%
Typical Markup by Industry
Different industries operate with vastly different markup percentages based on factors like competition, overhead costs, and customer expectations.
| Industry/Product | Typical Markup | Resulting Margin | Notes |
|---|---|---|---|
| Grocery Items | 10-25% | 9-20% | High volume, low margin |
| Clothing Retail | 100-300% | 50-75% | Keystone pricing common |
| Jewelry | 100-400% | 50-80% | Luxury perception |
| Electronics | 30-50% | 23-33% | Price competition |
| Furniture | 200-400% | 67-80% | Showroom costs |
| Restaurants | 200-400% | 67-80% | Labor & overhead |
| Auto Parts | 50-100% | 33-50% | Specialty items higher |
| Cosmetics | 300-500% | 75-83% | Brand value premium |
Pricing Strategies Using Markup
Keystone Pricing
Double your cost (100% markup). Simple and widely used in retail. Results in a 50% margin on every sale.
Tiered Markup
Apply different markups based on product value. Lower markups on expensive items (50%) and higher on cheap items (200%+).
Premium Positioning
Use higher markups (300%+) for luxury or specialty items where customers expect to pay more for quality.
Competitive Pricing
Match or slightly undercut competitors. Calculate your minimum viable markup to stay profitable.
Frequently Asked Questions
What is a good markup percentage?
It depends on your industry and business model. Retail typically uses 50-100% (keystone), restaurants 200-400%, and groceries 10-25%. Your markup must cover all operating expenses plus desired profit.
How do I calculate selling price from markup?
Multiply your cost by (1 + markup percentage as decimal). For a $40 cost with 75% markup: $40 × 1.75 = $70 selling price.
What's the difference between markup and profit?
Markup is a percentage used to calculate price. Profit is the actual dollar amount you earn after costs. A 100% markup on $50 cost gives $50 profit, but your actual net profit depends on operating expenses.
Should I use the same markup for all products?
Not necessarily. Many businesses use variable markup based on product category, competition, demand, and strategic importance. Loss leaders may have minimal markup while specialty items carry premium markup.
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