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Markup calculator

Markup from cost and price, margin alongside it, and the conversion between the two numbers people mix up constantly.
In one line

Enter cost and price to get markup percent, gross margin and profit per unit, plus the conversion table between the two.

Markup % = (Price − Cost) ÷ Cost × 100
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Fill this and the price above is recalculated.
Markup -
Gross margin-
Profit per unit-
Margin multiplier-
Markup is measured against cost. Margin is measured against price. They are never the same number.
Markup and margin are not the sameMarkup and margin are not the same150% markup is 60% margin40%Cost$40.0060%Markup added$60.00WHERE EVERY DOLLAR OF REVENUE GOES

The formula

Markup % = (Price − Cost) ÷ Cost × 100

What the number means

Markup is the amount you add on top of what a unit costs you, expressed as a share of that cost. Buy for $40, sell for $100, and you have added $60 to a $40 base, a markup of 150 percent. The same transaction is a gross margin of 60 percent, because margin measures the same $60 against the $100 you collected rather than the $40 you spent.

  • Both numbers are correct.
  • They answer different questions.
  • Markup is a pricing instruction: it tells a buyer or a merchandiser what to multiply cost by.
  • Margin is a reporting number: it tells you what share of revenue survived the cost of goods.
  • Purchasing teams think in markup, finance thinks in margin, and the gap between them is where a lot of quiet money gets lost.

Markup to margin, in one table

MarkupEquals margin of
15%13.0%
25%20.0%
50%33.3%
75%42.9%
100%50.0%
150%60.0%
233%70.0%
400%80.0%
The conversion runs both ways: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin), with both expressed as decimals. Notice how the two diverge as they climb. At small numbers they look close enough to confuse; at keystone pricing and above they are wildly different.

Pricing backwards from the margin you need

Most pricing conversations start from cost and add a number. The better direction is to start from the margin the business has to clear and work back to the price. If acquisition costs you $22 per customer, fulfilment and support take $6, and you want $12 of profit per unit on a $40 landed cost, the price has to carry $40 of cost plus $40 of everything else − a markup of 100 percent, a margin of 50 percent, and a break-even ROAS of 2×.

Run it in that order and the markup falls out as an answer rather than a habit. Run it the other way and you end up defending a number inherited from a category that had different economics.

The trap

The expensive mistake is setting prices on markup while planning ad spend on margin, or worse, assuming they are interchangeable because someone said "we work on 50".

The expensive mistake is setting prices on markup while planning ad spend on margin, or worse, assuming they are interchangeable because someone said “we work on 50”.

A retailer who believes 50 percent markup means 50 percent margin will calculate a break-even ROAS of 2× and buy traffic accordingly. The real margin is 33.3 percent, the real break-even ROAS is 3×, and every campaign sitting between those two numbers is losing money while looking profitable on the dashboard. On a $50,000 monthly budget that error is not a rounding difference − it is the difference between a business that funds its own growth and one that quietly funds Google’s.

  • The other trap is markup applied to a cost that is not the real cost.
  • Landed cost includes freight, duty, payment processing and returns.
  • Apply markup to the invoice price alone and you have priced a product that does not exist.

Frequently asked

Markup measures profit against cost, margin measures the same profit against the selling price. A 50 percent markup is a 33.3 percent margin. They only match at zero.
Divide the markup by one plus the markup, both as decimals. A markup of 0.5 gives 0.5 ÷ 1.5 = 0.333, so 33.3 percent margin.
It depends entirely on the category and what the price has to cover. Grocery runs on single digits, apparel often sits near keystone at 100 percent, and software has almost no unit cost to mark up at all. The useful test is whether the resulting margin covers acquisition cost, overhead and a profit.