Markup Calculator
Calculate selling price, gross profit, and gross margin from a cost and a markup percentage. Uses the universal retail pricing identity: Price = Cost × (1 + Markup).
Selling price
£150.00
- Gross profit
- £50.00
- Gross margin
- 33.33%
- Markup on cost
- 50%
- Cost
- £100.00
Selling price = Cost × (1 + Markup ÷ 100). Markup is the profit expressed as a percentage of cost, which is how retailers tag prices off a cost catalogue. The same profit as a percentage of the selling price is the gross margin — always lower than the markup. A 100% markup is a 50% gross margin; a 50% markup is a 33.3% margin; a 25% markup is a 20% margin.
How to use this calculator
Enter the cost — what you pay for one unit of the item (or per-period cost of goods sold). Then enter the markup percentage on cost. The calculator returns the selling price, gross profit per unit, gross margin (the same profit as a percentage of the selling price), and echoes back the markup so you can sanity-check. To go the other way — from a desired margin to a markup — divide the margin by (1 minus the margin): a 40% margin needs a 66.67% markup.
How the calculation works
Markup is the profit expressed as a percentage of cost. Selling Price = Cost × (1 + Markup ÷ 100). Gross Profit = Selling Price − Cost. Gross Margin = Gross Profit ÷ Selling Price × 100 — the same money, but measured against the selling price instead of the cost. Markup is always higher than margin for the same item, because the base (cost) is smaller than the base (price). The conversion: Margin = Markup ÷ (1 + Markup); Markup = Margin ÷ (1 − Margin).
Worked example
A retailer buys a widget for $100 and applies a 50% markup. Selling price = 100 × 1.50 = $150. Gross profit = $50. Gross margin = 50 ÷ 150 = 33.33%. If the same retailer instead targets a 50% gross margin on the $100 cost, they need a 100% markup: price = 100 × 2.00 = $200, gross profit = $100, margin = 100 ÷ 200 = 50%.
Frequently asked questions
What is the difference between markup and margin?
Both measure the same gross profit, but as a percentage of different bases. Markup is gross profit divided by cost; margin is gross profit divided by selling price. A widget that costs $100 and sells for $150 has a 50% markup (50 ÷ 100) and a 33.33% margin (50 ÷ 150). Retailers price off cost, so they think in markup; investors and analysts compare companies by margin. The conversion: margin = markup ÷ (1 + markup); markup = margin ÷ (1 − margin).
How do I work backwards from a desired margin to a markup?
If you want a gross margin of m (as a decimal), the markup you need on cost is m ÷ (1 − m). A 40% margin needs 0.40 ÷ 0.60 = 66.67% markup. A 50% margin needs 0.50 ÷ 0.50 = 100% markup. A 25% margin needs 0.25 ÷ 0.75 = 33.33% markup. Do not just multiply cost by (1 + margin) — that is the single most common pricing error in small business. The correct multiplier for a 40% margin is 1 ÷ 0.60 ≈ 1.667, not 1.40.
What is a typical markup by industry?
Industry rules of thumb (markup on cost): grocery and food retail 25–40%, mass-market apparel and general retail 50–100% (often called "keystone" pricing at 100%), restaurants 200–300% on food, jewellery 100–300%, branded consumer goods 100–200%, industrial parts 25–60%, software and SaaS effectively unbounded because marginal cost is near zero. These are heuristics, not benchmarks — compare against direct competitors in the same channel.
Why is markup always higher than margin?
They divide the same gross profit by different bases. Cost is always smaller than selling price (assuming the business sells at a profit), so dividing by the smaller number gives a larger percentage. Mathematically, markup = margin ÷ (1 − margin), and (1 − margin) is always less than 1 for any profitable sale, so markup > margin. The two only meet at zero: a zero-profit sale has zero markup and zero margin.
Can markup be more than 100%?
Yes, and it often is. A 100% markup means the selling price is exactly twice the cost — called "keystone" in retail. Branded consumer goods, restaurants, and luxury items routinely run markups of 200–500% or more. There is no mathematical upper bound on markup; the only limit is what customers will pay. Margin, by contrast, caps at 100% (only reachable if cost is zero).
How does markup relate to keystone pricing?
Keystone pricing is the retail convention of doubling the wholesale cost to set the retail price — a 100% markup, equivalent to a 50% gross margin. It was the default in US general merchandise retail through the 20th century and still applies in some categories (independent gift shops, sporting goods, hardware). Modern retail has moved beyond pure keystone: high-volume mass merchandisers run 30–50% markups, while luxury and specialty often run 200–400%. Keystone is a useful mental anchor, not a rule.