Markup Calculator

Markup is the profit expressed as a percentage of cost, while margin is the same profit expressed as a percentage of the selling price. A 50 percent markup on a $10 item produces a $15 price, but the margin on that sale is only 33 percent because $5 profit divided by $15 revenue equals one third.

You need a markup of about 66.7 percent. The formula is markup equals margin divided by (1 minus margin). So 0.40 divided by 0.60 equals 0.667, or 66.7 percent. Using a 40 percent markup when you want a 40 percent margin is a common and costly mistake that leaves real profit on the table.

Keystone pricing means doubling the wholesale cost to set the retail price, which equals a 100 percent markup or a 50 percent gross margin. It has been the default in clothing and general retail for decades because it is simple to apply across a large catalog and typically covers overhead and generates profit at reasonable sales volumes.

Not necessarily. A higher markup reduces unit sales if it pushes price above what the market will pay. Profit depends on both margin per unit and the number of units sold. A 20 percent markup on high-volume fast-moving goods can produce more total profit than a 200 percent markup on items that sit unsold for months.