Markup Calculator — Price, Profit and Margin

Enter what something cost you and how much you want on top. You get the selling price, the profit, and the markup and margin side by side. That last pair is the point: they are different numbers, and treating them as one is the most expensive arithmetic mistake in pricing.

Created by Ashar PervaizLast updated 24 October 2026

The Same Profit, Divided by Two Different Numbers

Buy something for 60 and sell it for 100. The profit is 40. That is a 66.7% markup and a 40% margin, and both are correct. Markup divides the profit by what you paid; margin divides it by what you charged.

The margin is always the smaller of the two, and the gap grows as the product gets more profitable. At a 10% markup the margin is 9.1%, close enough that nobody notices. At a 100% markup the margin is 50%. At a 300% markup it is 75%. Anyone who has learned to treat them as roughly interchangeable on cheap stock gets an unpleasant surprise the first time they price something with real room in it.

What a Markup Converts To

Every figure here is produced by the same two divisions, not typed in: margin is markup ÷ (100 + markup), and markup is margin ÷ (100 − margin).

And What a Margin Demands

The more useful direction in practice, because margin is usually the target handed to you and markup is the instruction you need to carry it out. The trap is in the first row of every one of these: asking for a 30% margin and applying a 30% markup leaves you at 23.1%.

Why a Margin Cannot Reach 100%

Margin is profit as a share of the selling price, and the cost never vanishes from the selling price. To hit 100% you would need the item to have cost nothing. This is why a request for a "120% margin" is not an ambitious target but an impossible one, and why this calculator refuses the figure rather than printing something confident and wrong.

Markup has no such ceiling. A 400% markup is ordinary in some categories. It means selling at five times cost, which is an 80% margin. The absence of a ceiling is precisely what makes markup the friendlier number to quote and the easier one to inflate.

What Belongs in the Cost

Everything that scales with the unit. The purchase or manufacturing price, obviously. Then the packaging, the shipping in, the payment processing fee and any per-item commission a marketplace takes. Leave those out and the margin on the screen is not the margin in your bank account.

What does not belong is rent, salaries, software and everything else that costs the same whether you sell one unit or a thousand. Those are paid out of the gross profit this calculation produces, which is the reason a 15% margin can look survivable per item and still lose money across a year.

Keystone, and Why It Is 50%

Keystone pricing means doubling the cost. It is a 100% markup, which is a 50% margin, and it survives as a retail default because it is the one calculation anybody can do while holding a box. The traditional argument for it is that half of revenue is roughly what it takes to cover rent, staff, shrinkage and the markdowns at the end of a season.

Plenty of categories cannot support it. Groceries run on single figures, consumer electronics rarely clear 10%, and both survive on volume instead. It is a starting point for a conversation about pricing, not an answer to it.

What a Discount Really Costs

A discount does not come out of the price. It comes out of the profit, which is a much smaller number, and that is why a sale that looks modest can wipe out a month.

Take something costing 60 and selling at 100, a 40% margin. Knock 10% off and the price is 90, but the profit has gone from 40 to 30. A tenth off the price is a quarter off the profit. To finish the promotion no worse off, you need to sell a third more units than you would have.

Every figure there is the same division: the margin you had, divided by the margin you have left. The bottom-left corner is the one worth staring at. On a 20% margin, a 20% discount leaves nothing at all. No volume of sales fixes it, because each unit now makes zero. That is not a bad promotion, it is a promotion that cannot work, and it is run somewhere every week.

It also explains why the businesses that discount hardest tend to be the ones with the fattest margins. A 70% margin can absorb 30% off and only needs 75% more units. A grocer on 5% cannot discount at all, which is why they run loss leaders on a handful of lines instead and make it back elsewhere.

What Counts as a Normal Margin

There is no universal answer, and anyone offering one is selling something. What there is instead is a strong pattern: margin is inversely related to volume and to how easily the thing can be compared on price.

Groceries and consumer electronics run on single figures to low tens, because customers compare prices to the penny and the volume is enormous. Clothing and furniture sit far higher, because sizing, style and delivery make direct comparison harder and the stock carries real markdown risk. Software sits higher still, because the cost of the next copy is close to nothing, which is also why the margin figure for software tells you very little on its own.

Rather than aim at someone else's number, work out what yours has to cover. Add up the costs that do not move with sales — rent, salaries, software, insurance — and divide by the gross profit per unit the calculator above gives you. That is how many units a month you need before anything is actually yours, and it is a far more useful figure than a percentage from an industry report.

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