How Markup Works
Markup is the amount you add to what something cost you, expressed as a percentage of that cost. It is the natural way to price when you buy at a known price and need a selling price: take the cost, add the markup, done.
Price = Cost × (1 + Markup ÷ 100)
A part costs $60 and sells for $90. Profit is $30, so markup = (30 ÷ 60) × 100 = 50%. The same sale expressed as margin is (30 ÷ 90) × 100 = 33.3%.
Markup and Margin Are Not Interchangeable
Markup divides profit by cost; margin divides the same profit by price. Because price is always the larger number, markup is always the larger percentage. Quoting one and budgeting for the other is how businesses accidentally underprice: aiming for "50%" and applying it as markup produces only a 33.3% margin. Our margin calculator solves from either direction and always shows both.
Markup = Margin ÷ (100 − Margin) × 100
Quick Conversion Reference
| Markup | Equals margin | Multiply cost by |
|---|---|---|
| 15% | 13.0% | 1.15 |
| 25% | 20.0% | 1.25 |
| 33.3% | 25.0% | 1.333 |
| 50% | 33.3% | 1.50 |
| 66.7% | 40.0% | 1.667 |
| 100% | 50.0% | 2.00 |
| 150% | 60.0% | 2.50 |
| 300% | 75.0% | 4.00 |
Choosing a Markup
A markup has to cover more than the item itself: shipping, storage, shrinkage, returns, payment fees, and a share of the overheads that keep the doors open — before anything is left over as profit. That is why categories with high handling costs or slow turnover carry higher markups, while fast-moving goods survive on thin ones. Work backwards from the margin your business needs, using the break-even calculator to see what your fixed costs actually demand.
In practice How a workshop quotes a job without underpricing it
A cabinetmaker buys materials for a fitted wardrobe at $1,200. His rule of thumb is "add 50%", so he quotes $1,800. That is a 50% markup — but only a 33.3% margin, because the $600 profit is measured against the larger $1,800 the customer pays.
His accountant says the business needs a 50% margin to cover the workshop lease and his own wages. To hit that he must divide rather than add: 1,200 ÷ 0.50 = $2,400, which is a 100% markup. Quoting "50%" when he needed 100% would have cost him $600 on a single job — and on every job after it.
Frequently Asked Questions
How do you calculate markup percentage?
Divide the profit by the cost and multiply by 100. An item costing $60 sold for $90 has $30 profit, so the markup is (30 ÷ 60) × 100 = 50%.
How do I apply a markup to a cost?
Multiply the cost by (1 + markup ÷ 100). A 35% markup on $80 gives 80 × 1.35 = $108.
Is a 100% markup the same as a 100% margin?
No, and this is the classic trap. A 100% markup means you doubled the cost — $50 becomes $100 — which is a 50% margin. A 100% margin would mean the item cost you nothing.
Why do wholesalers quote markup but retailers talk margin?
Wholesalers and manufacturers price up from a known cost, so markup is the natural language. Retailers analyse a percentage of the sales they ring up, so margin fits their reporting. The same deal gets described both ways, which is why converting between them matters.
What is keystone pricing?
A traditional retail rule of doubling the wholesale cost — a 100% markup, equal to a 50% margin. It survives as a rough default in apparel and gifts, though many categories can no longer support it.
Sources & Further Reading
- Cost-plus pricing and markup conventions — Kotler & Keller, Marketing Management
- Small business pricing guidance — U.S. Small Business Administration
Cite This Calculator
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The CalculatorsGuide Editorial Team. (2026). Markup Calculator. CalculatorsGuide. Retrieved from https://www.calculatorsguide.com/finance/markup-calculator/