The short version
Markup is how much you tack onto cost to land on a price. Buy a widget for $40, sell it for $60, and you’ve marked it up by 50% because the $20 profit is half the cost. The formula running the first mode is price = cost x (1 + markup/100). Type your cost, type the markup percent you want, and the selling price falls out instantly, along with the per-unit profit.
Flip to the second mode and the calculator solves the reverse. You already know your cost and the price you’re charging, so it back-computes the markup with (price - cost) / cost x 100 and hands you the profit margin too. Handy when a supplier or a spreadsheet gives you the two dollar figures and you need the percentages to compare lines.
Markup is not margin (this trips everyone up)
Here’s the thing that quietly wrecks pricing math: markup and margin describe the same profit, but against different denominators.
- Markup divides profit by cost:
(price - cost) / cost. - Margin divides profit by the selling price:
(price - cost) / price.
So that 50% markup on a $40 cost? The price is $60, the profit is $20, and the margin is only 33.33%, because $20 is a third of the $60 you collected. Markup always looks bigger than margin on the same item. People who mark up 30% thinking they’re keeping 30% of revenue are actually keeping about 23%. The calculator shows both numbers side by side so the gap is never a surprise at the end of the month.
A rough cheat sheet for common markups and the margin each one really gives:
- 25% markup is a 20% margin
- 50% markup is a 33.3% margin
- 100% markup (keystone pricing) is a 50% margin
- 200% markup is a 66.7% margin
When you’d reach for this
Retail uses “keystone” pricing all the time, doubling the wholesale cost, which is a 100% markup and a clean 50% margin. Restaurants run much higher markups on drinks to cover the thin margins on food. Freelancers marking up subcontracted work or pass-through expenses use the same math to make sure the convenience of handling it is actually paying off.
The reverse mode earns its keep during competitor research. You can estimate a rival’s cost, plug in their shelf price, and see roughly what markup they’re running, which tells you how much room you’ve got to undercut them before you’re selling at a loss yourself.
FAQ
What’s the difference between markup and margin again?
Markup measures profit against your cost. Margin measures the same profit against the selling price. Markup is always the larger percentage. A 50% markup equals a 33.3% margin.
How do I calculate selling price from cost and markup?
Multiply the cost by one plus the markup as a decimal. Cost $40 at 50% markup: 40 x 1.5 = $60. The first mode does exactly this.
Can markup be more than 100%?
Absolutely. There’s no ceiling. A $5 item sold for $25 has a 400% markup. Software and luxury goods often run markups in the hundreds or thousands of percent because their unit cost is tiny.
Why is my margin lower than my markup?
Because margin divides by the bigger number (the price) while markup divides by the smaller one (the cost). Same dollar profit, larger denominator, smaller percentage. It’s normal and expected.
Does this include tax or shipping?
Nope, it works on the raw cost and price you enter. If you want shipping or fees baked in, fold them into your cost figure first, then read off the markup and margin.