How markup is calculated
- Markup % = (price − cost) ÷ cost × 100. It measures your profit as a slice of the cost — the way most buyers and sellers instinctively talk about pricing.
- Selling price = cost × (1 + markup ÷ 100). A $60 cost with a 50% markup prices at $90.
- Margin equivalent = markup ÷ (100 + markup) × 100. That 50% markup is only a 33.3% margin — margin is always the smaller number, and confusing the two is how shops underprice.
Already have a price and wondering what margin it really earns? Check it with the profit margin calculator, then quote the client formally with the invoice generator.
FAQ
What is keystone pricing?
Keystone means doubling the cost — a 100% markup. It has been the traditional baseline for bricks-and-mortar retail for decades because it leaves room for rent, staffing and markdowns while still earning a 50% margin.
How do I convert markup to margin?
Divide the markup by (100 + markup) and multiply by 100. So 50% markup → 50 ÷ 150 = 33.3% margin, and 100% markup → 50% margin. Margin is always the smaller figure.
How do I calculate a selling price from cost and markup?
Multiply cost by (1 + markup ÷ 100): a $60 item at 50% markup sells for $60 × 1.5 = $90. The calculator above does it instantly and shows the margin behind the price.
What is a typical markup for retail?
Keystone (100%) is the classic baseline. Boutique and specialty goods often carry 150–300% markups, while high-volume groceries may run 10–25%. Service businesses usually price on margin rather than markup.
Should I price on markup or margin?
Use markup when you think in terms of "what did this cost me and what do I add on". Use margin when you need to hit a profitability target measured against revenue — which is how accountants and investors report it. Just never mix the two in the same sentence.
Does markup include overhead?
Only if you deliberately build it in. A markup calculated purely on product cost must be large enough to also cover rent, labour and marketing — which is why high-volume, low-markup businesses survive on scale.
How does VAT or sales tax affect markup?
Tax does not belong in your markup maths: compute markup on pre-tax prices only, then let the till or invoice add tax on top. Charging tax inside a marked-up price silently shrinks your real margin.