Formulas
Price = Cost × (1 + Markup)
Price = Cost ÷ (1 − Margin)
Markup = Profit ÷ Cost · Margin = Profit ÷ Price
Price = Cost ÷ (1 − Margin)
Markup = Profit ÷ Cost · Margin = Profit ÷ Price
Example: An item costs $40. With a 50% markup the price is $60, the profit $20 and the gross margin 33.33%. To reach a 40% margin instead, you would need to charge $66.67 — a 66.7% markup.
Markup ↔ margin quick reference
- 25% markup = 20% margin
- 50% markup = 33.3% margin
- 100% markup = 50% margin
- 200% markup = 66.7% margin
Check how many units you must sell to cover fixed costs with the break-even calculator.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A product that costs $40 and sells for $60 has a $20 profit: a 50% markup but a 33.3% margin.
How do I calculate selling price from markup?
Price = cost × (1 + markup ÷ 100). A $40 item with a 50% markup sells for $60.
How do I calculate price from a target margin?
Price = cost ÷ (1 − margin ÷ 100). To earn a 40% margin on a $40 item, charge $40 ÷ 0.6 = $66.67.
What is keystone pricing?
Retail keystone pricing doubles the wholesale cost: a 100% markup, which equals a 50% gross margin.