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Markup Calculator Guide
Markup is how much you add to your cost to reach a selling price, expressed as a percentage of the cost. This markup calculator runs in all three directions — find the markup, the price, or the cost you need.
Markup % = ((Price − Cost) ÷ Cost) × 100
Buy at $40, sell at $100, and your markup is 150%.
Backwards: Price = Cost × (1 + Markup ÷ 100)
Markup Is Not Margin
This is the single most expensive confusion in small business pricing, and it catches people constantly. Both describe the same $60 of profit on that $40 item — they just divide it by different things.
Markup divides profit by cost: $60 ÷ $40 = 150%.
Margin divides profit by price: $60 ÷ $100 = 60%.
Same transaction, wildly different numbers. Someone who applies a "50% markup" thinking they've earned a 50% margin has actually earned 33.3% — and if their costs assumed 50%, they're losing money on every sale. Our margin vs markup calculator shows both side by side.
Why Markup at All?
Because it's how you actually price things. You start from what an item cost you and work forwards. Margin is the retrospective view — how much of the sale you kept. Buyers think in markup; accountants think in margin.
Keystone Pricing
Traditional retail often uses "keystone" — a 100% markup, meaning you double the cost. That gives a 50% margin. It's a rule of thumb from an era of simpler cost structures, and it survives because the arithmetic is easy, not because it's optimal.
Cost Means Landed Cost
The most common pricing error after the margin mix-up. Your cost isn't just the invoice price — it's shipping, duties, packaging, payment processing fees, and returns. Price off the invoice alone and your real margin is thinner than you think, sometimes dramatically so on low-value items where shipping dominates.
Markup Doesn't Set Your Price — the Market Does
A markup formula tells you what a price yields, not what customers will pay. If a 150% markup puts you above what the market bears, the answer isn't a lower markup — it's a lower cost, a different product, or a reason to justify the price.
Once you know your unit profit, our break-even calculator tells you how many you need to sell to cover fixed costs.
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