Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Markup and margin get used as if they're the same idea with different names, and the confusion is expensive because the two percentages divide the identical dollar gap by different bases. A 50% markup on a $40 cost prices the item at $60; a genuine 50% margin on that same $40 cost prices it at $80: two prices, both described with the same round number, sixteen dollars apart.
Before you rely on it
What to check
State clearly whether a target is markup-on-cost or margin-on-price before pricing anything off it. The two words are not interchangeable inputs to the same formula.
The common error
Where people go wrong with markup calculator
Converting a competitor's stated margin into a markup by using the same percentage. A competitor's 40% margin translates to roughly a 67% markup on cost, not 40%, and copying the number straight across systematically underprices against them.
Sensitivity evidence
How selling price changes the markup
| Selling price | Markup | Gross profit per unit |
|---|---|---|
| $80 | 33.3% | $20 |
| $90 | 50.0% | $30 |
| $100worked example | 66.7% | $40 |
| $110 | 83.3% | $50 |
| $120 | 100.0% | $60 |
Every input, tested
Which input moves the markup most
| Input | Tested from | To | Markup at each end | Swing |
|---|---|---|---|---|
| Selling price | $90 | $110 | 50.0% to 83.3% | 33.3% (50%) |
| Unit cost | $54 | $66 | 85.2% to 51.5% | 33.7% (51%) |
Two variables at once
Markup by selling price and unit cost
| Selling price \ Unit cost | $48 | $60 | $72 |
|---|---|---|---|
| $80 | 66.7% | 33.3% | 11.1% |
| $90 | 87.5% | 50.0% | 25.0% |
| $100 | 108.3% | 66.7% | 38.9% |
| $110 | 129.2% | 83.3% | 52.8% |
| $120 | 150.0% | 100.0% | 66.7% |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Unit cost | $60 |
| Selling price | $100 |
| Markup | 66.7% |
| Gross profit per unit | $40 |
Where the inputs come from
Unit cost is what it costs you to buy or make one unit, including freight and direct labor, and selling price is what you charge. Use the cost that reflects your latest purchase, not an old average, especially when supplier prices change. If you sell at several price points, run each. Markup is measured against cost, which makes it a larger percentage than the margin on the same sale.
When the result stops applying
Markup ignores volume, so a high-markup product that sells slowly may earn less than a low-markup one that turns fast. It also ignores overhead: covering fixed costs requires enough total gross profit, not just a healthy markup on each item. Discounting eats into it quickly, so test the price after typical promotions.
What to compare it with
See the same figures as a margin on the gross margin and gross profit calculators, and the target price page to set a price for a desired margin. The break-even calculator shows the volume needed to cover fixed costs at your markup. Check competitors' prices before committing to a markup, since the market sets the ceiling.
People also ask
Frequently asked questions
What is the difference between markup and margin?
Markup is profit divided by cost, and margin is profit divided by selling price. A 100% markup is only a 50% margin, which is why the two are often confused.
How do I price with a 50% markup?
Multiply your cost by 1.5. A $60 cost becomes a $90 price, which gives $30 of profit and a 33% margin.
Should every product have the same markup?
Not necessarily. Fast movers and price-sensitive items often carry lower markups, while specialty or convenience items can support higher ones.