Markup & Margin Calculator

Markup: profit as a percentage of COST. Margin: profit as a percentage of SELLING PRICE. Example: Cost $40, Sell $60. Profit = $20. Markup = $20 ÷ $40 × 100 = 50% markup. Margin = $20 ÷ $60 × 100 = 33.3% margin. Same transaction, different denominators. Key insight: a 50% markup ≠ 50% margin. A 100% markup (doubling the cost) gives only 50% margin. Common mistake: confusing markup with margin leads to under-pricing. Many small businesses set prices using markup but then compare to industry benchmarks quoted in margin — this leads to silent losses.

Selling price = Cost × (1 + Markup%). Example: Cost $25, 60% markup → $25 × 1.60 = $40 selling price. Or: Selling price = Cost + (Cost × Markup%). For margin-based pricing: Selling price = Cost ÷ (1 − Margin%). Example: Cost $25, 40% margin → $25 ÷ (1 − 0.40) = $25 ÷ 0.60 = $41.67. Note: these give different results. Choosing markup vs margin changes the price. Retail industry: supermarkets run at 1–3% margin. Electronics retail: 10–15%. Clothing: 30–50%. Restaurants: food cost is typically 25–35% of menu price (65–75% margin).

COGS is the direct cost to produce or acquire goods sold. For retailers: purchase price of inventory. For manufacturers: raw materials + direct labor + manufacturing overhead. NOT included: selling expenses, admin overhead, marketing. Gross profit = Revenue − COGS. Gross margin = Gross profit ÷ Revenue × 100. Why it matters: gross margin must cover operating expenses AND provide net profit. If COGS is $40 and rent+staff is $30/unit, you need selling price > $70 just to break even. This calculator uses cost as a proxy for COGS — adjust for additional costs specific to your business.

It depends on your industry and cost structure. Common markups by industry: Jewelry: 50–100%+ (keystone markup = 100%). Furniture: 200–400% retail markup. Software: near 100% margin (very low COGS). Restaurants: 200–300% over food cost (but high operating costs). Electronics: 10–20% in retail. Auto parts: 20–40%. Construction: 10–20% on subcontracts. Rule of thumb: you need your gross margin to cover all operating expenses plus target net profit. If operating expenses are 40% of revenue and you want 10% net profit, you need at least 50% gross margin. Formula: Required markup = (1 ÷ (1 − required_margin)) − 1.

Markup to Margin: Margin = Markup ÷ (1 + Markup). Example: 50% markup → 50% ÷ 150% = 33.3% margin. Margin to Markup: Markup = Margin ÷ (1 − Margin). Example: 40% margin → 40% ÷ 60% = 66.7% markup. Quick reference table: 10% markup = 9.1% margin. 25% markup = 20% margin. 50% markup = 33.3% margin. 100% markup = 50% margin. 200% markup = 66.7% margin. 400% markup = 80% margin. Keystone pricing (100% markup = 50% margin) has historically been a retail standard for many categories. It ensures that if you put something on sale at 25% off (75% of price), you still have 25% margin.