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