Markup Calculator

The same 40% gives you $70 or $83.33

Markup is profit as a percentage of cost; margin is the same profit as a percentage of price. Buy an item for $50, sell it at $70, and the $20 you kept is a 40% markup against the $50 you paid but a 28.57% margin against the $70 the customer paid. Only the denominator changed. Every result on this page prints both numbers side by side: markup is what you price forward from a supplier invoice with, margin is what you actually kept. Markup is applied to cost and never to the selling price, and because the price is the larger of the two, margin is always the smaller percentage.

If the 40% you were handed was a margin target instead, the price has to be 50 ÷ (1 − 0.40) = $83.33, which is a 66.67% markup and $33.33 of profit per unit. The difference between $70 and $83.33 — about 16% of revenue — is what confusing the two denominators silently costs on every sale.

At 100 units the 40%-markup price earns $2,000 of gross profit and the 40%-margin price earns $3,333. The decision rule is one line — if the target was quoted to you as a markup, multiply; if it was quoted as a margin, divide. Target Margin mode applies the division and shows the comparison, because marking up by your target margin percentage always underprices.

Markup formulas

Those four cover the forward direction. The conversion running the other way, from a margin already committed to back to the markup that delivers it, is: Markup% = Margin% ÷ (100 − Margin%) × 100. A 40% target margin needs a 66.67% markup, a 20% margin needs 25%, and a 50% margin needs a 100% markup.

That last row has a name. A 100% markup — doubling your cost, so a $25 cost sells at $50 — is keystone pricing, and because the profit exactly equals the cost, keystone lands on precisely a 50% gross margin every time. Keystone is a retail convention rather than a rule, and conventions of that kind vary widely by category, region, and competition, so the multiplier worth trusting is the one your own cost base supports rather than the one you inherited.

The most you can pay a supplier at a fixed shelf price

Buyers negotiate against a cost ceiling, not a markup. At a shelf price the market has already set, the target margin fixes the highest landed cost that still works.

Reverse Cost mode runs that table on your own numbers. Price Analysis mode runs the opposite direction — hand it a cost and a price you already charge and it returns the markup and margin they imply, the quickest way to audit a price list you inherited rather than wrote.

The cost you type in should be the direct cost of the unit and nothing else: product, materials, packaging, and inbound freight, matching the cost-of-goods-sold items the IRS guidance below lists. Overheads such as rent, salaries, insurance, and software do not belong in that figure; Quantity mode spreads them across the volume you expect to sell instead of burying them in a per-unit markup that has to be re-cut every time volume moves.

Marketplace fees and the markup they force

On a $30 landed cost held to a 40% net margin: the fee is a share of price, not cost, so each rise to cover it enlarges the fee again.

Ecommerce mode does this with your own fee schedule. Platform commission, payment processing, and a return or refund allowance sit on top of the base cost, so you read the landed cost and the true margin after those deductions rather than the gross markup — the mode for Shopify, Amazon, Etsy, or eBay pricing. Percentage fees are modelled as a share of the selling price, where the platforms actually charge them.

Watch the diagnosis badges while you work: the calculator flags fee pressure and thin margins where it finds them.

When your supplier raises the cost

Recovering the cash and recovering the percentage are different policies. Base case: a $30 cost at a $50 shelf price, $20 gross profit, 40% margin. The gap widens with every increase.

Markup on a bill rate: staffing and agency pricing

Staffing quotes markup on the pay rate while the client evaluates margin on the bill rate, and the two are never equal. The $40 here is the raw wage — employer taxes, insurance and benefits belong in the cost before the markup is applied.

To price your own placement, enter the worker’s pay rate as the cost and your desired markup percentage; the calculator returns the bill rate you would put in front of the client, together with the margin you would be earning on it.

Marking up a commodity whose cost moved this morning

A fixed percentage applied to the historical cost sitting in the ledger prices yesterday's purchase, not tomorrow's replacement. When paddy (unmilled rice) moves several percent in a week, a sale at a healthy markup on last week's cost can leave too little cash to refill the same stock. Commodity traders therefore quote off today's replacement cost and book any gain on old stock separately as an inventory gain, not as trading margin. Accounting draws the same line: the lower-of-cost-or-market rule governs how closing stock is valued for a bank stock statement, and FIFO versus weighted-average cost reports materially different margins in a rising market. Mark up on the cost you will actually pay to replace the unit, and let the accounting policy decide what to call the difference.

All nine modes, and the one you actually need

Nine modes sit behind one switch, each answering a different pricing question; most visitors only ever need one.

The $20 this page calls profit is not the $20 you keep

Every profit figure here is a gross figure: in the $50 cost, $70 price example, the $20 is what survives the cost of the goods and nothing else. Gross margin is not net margin, and a markup that looks healthy on the invoice can still leave very little behind once the month’s operating costs arrive. This calculator does not automatically include taxes, refunds, chargebacks, depreciation, salaries, rent, interest, inventory shrinkage, or working capital: none are deducted unless you enter them as costs, and Quantity mode’s overhead field is the one place the tool asks for them.

Sales tax, VAT, or GST collected from a customer is normally a pass-through owed to the tax authority rather than money you earned, so it is excluded from every markup and margin figure on this page — the HMRC and CBIC references below are the rules that make it so. If you need a tax-inclusive shelf price, add the tax on top of the price this page returns; folding it into the markup base inflates both the markup and the margin with money that was never yours.

Two limits are worth stating plainly. The first is scope: it does not replace accounting advice, it does not know what your competitors charge, and it cannot guarantee that a single unit sells at the price it returns, because demand and volume sit outside the arithmetic entirely. The second is the category rules of thumb — keystone, the three-times food multiplier, the thin markups grocers live on — which are conventions rather than fixed rates, so benchmark them against your own cost base and against the measured retail margins in the Census Bureau survey below.

This is a pricing estimate, not bookkeeping. For the full revenue-to-net-profit waterfall see the profit margin calculator; for overhead coverage see the break-even calculator; for ad-spend limits see the break-even ROAS calculator.

Related calculators

This page prices from cost; these tools take the analysis further:

More in Business, or browse all calculators.

Read the guide

For the full comparison of margin, markup, and break-even with worked examples, see Profit Margin vs Markup vs Break-Even: The Difference Explained.

Sources and methodology

The markup and margin arithmetic on this page is definitional: it follows from where you put the profit in the denominator, and it fetches nothing. No supplier prices, no competitor prices, no tax rates, no platform fees.

The category conventions deserve a plain statement. Keystone pricing at double cost, the three-times food multiplier and the thin grocery markups are trade habits passed between operators. No government, regulator or standards body issues them, and we found no authority to cite for any of them. The Census Bureau survey below is the nearest honest substitute: it reports the gross margins US retailers actually achieved, which is a measurement rather than a rule.

What is genuinely governed is what you may advertise. If you mark a product up in order to show a discount from a price you never really sold at, the FTC pricing guides below are what the FTC applies. Links open in a new tab.

• Guides Against Deceptive Pricing, 16 CFR Part 233 - section 233.1 on former-price comparisons: the federal rule that a price you advertise as the regular one must be a price you actually offered in good faith, which constrains marking a product up specifically in order to discount from it laterU.S. Federal Trade Commission, via GovInfo (U.S. GPO) · verified 2026-09-01
• About Form 1125-A, Cost of Goods Sold - the official list of what belongs in the cost figure the markup percentage is applied to: purchases, direct labour, materials and supplies, and other direct costsInternal Revenue Service (IRS) · verified 2026-09-01
• Publication 334, Tax Guide for Small Business - gross profit and the cost base behind it, the basis for this page rule that markup applies to cost while margin divides the same profit by priceInternal Revenue Service (IRS) · verified 2026-09-01
• Annual Retail Trade Survey - published gross margins by kind of retail business, the measured counterweight to trade conventions such as keystone pricing and category multipliersU.S. Census Bureau · verified 2026-09-01
• Charge, reclaim and record VAT - the UK rule that VAT charged to a customer is output tax owed to the tax authority, which is why the assumption above treats tax collected as not part of profitHM Revenue & Customs (GOV.UK) · verified 2026-09-01
• GST goods and services rates - the Indian rate schedule for the same point, for sellers pricing in INR who must keep GST collected out of the markup baseCentral Board of Indirect Taxes and Customs (CBIC), Government of India · verified 2026-09-01