What is the difference between markup and margin?

Markup and margin both describe profitability but from different perspectives. Markup is calculated on cost: if you pay $50 for a product and sell it for $70, the markup is $20 ÷ $50 = 40%. Margin is calculated on the selling price: the same transaction gives a margin of $20 ÷ $70 = 28.57%. The key relationship: markup is always a higher percentage than margin for the same product. Many business owners make the mistake of adding their 'target margin' directly to the cost — if you want a 40% margin and add 40% to a $50 cost to get $70, you have only achieved a 28.57% margin, not 40%. To achieve a 40% margin, you need a 66.67% markup: $50 ÷ (1 − 0.40) = $83.33.

How do I calculate the right markup to hit a target margin?

Use the formula: Markup % = Margin % ÷ (100 − Margin %). For common targets: 10% margin → 11.11% markup; 20% margin → 25% markup; 25% margin → 33.33% markup; 30% margin → 42.86% markup; 40% margin → 66.67% markup; 50% margin → 100% markup. To use the calculator: select 'Cost + Margin %' mode, enter your cost and target margin percentage — the calculator gives you the exact selling price and the corresponding markup. Alternatively, use the Markup vs Margin reference table below the calculator to find the right markup for your target margin at a glance.

What markup is standard in different industries?

Markup percentages vary enormously by industry based on cost of goods, overhead, competition, and customer expectations. Rough industry benchmarks: retail apparel: 100–400% markup (keystone = 100%); electronics: 10–30%; grocery/supermarket: 20–50%; restaurants: 200–500% on food (gross margin ~65%); software/SaaS: 70–90% gross margin; manufacturing: 20–50%; pharmaceuticals: 200–400%; jewellery: 100–300%; automotive parts: 25–100%; books: 25–50%; furniture: 100–200%. These are gross markup figures and do not account for operating expenses, rent, salaries, and overheads that reduce net profit significantly. A 50% gross margin in retail might translate to a 5–15% net profit margin after all operating costs.

What is keystone markup?

Keystone markup is a traditional retail pricing rule that sets the selling price at exactly double the wholesale cost — a 100% markup, giving a 50% gross margin. For example, a product that costs the retailer $25 would be priced at $50. Keystone pricing was widely used in traditional brick-and-mortar retail as a simple rule of thumb that ensured enough margin to cover overheads and generate profit. In today's competitive e-commerce environment, keystone markup is less universal — high-volume, low-margin categories (electronics, appliances) operate well below keystone, while high-margin categories (cosmetics, clothing, jewellery) often price above keystone. The term 'below keystone' means the markup is less than 100% (margin less than 50%).

What is the difference between gross margin and net margin?

Gross margin (also called gross profit margin) is what this calculator computes: (selling price − cost of goods) ÷ selling price. It only deducts the direct cost of the product — what you pay to manufacture or purchase it. Net profit margin deducts all operating expenses as well: rent, salaries, marketing, utilities, taxes, loan interest, and depreciation. For example, a retailer might have a 40% gross margin on every product sold, but after paying for staff, rent, and marketing, the net profit margin might be only 5–10%. The gap between gross and net margin is your operating expense ratio. Both matter: gross margin tells you whether your pricing is sound; net margin tells you whether the business is actually profitable.

Markup Calculator — Price, Markup %, Margin % & Gross Profit

Markup and margin are two of the most commonly confused concepts in business pricing — and confusing them can seriously damage profitability. Markup is the percentage added to the cost to get the selling price (profit ÷ cost). Margin is the percentage of the selling price that is profit (profit ÷ pr...

MARKUP CALCULATOR

I know…

Cost ($)

Markup (%)

Quantity — for bulk P&L

SELLING PRICE

$70.00

GROSS PROFIT

$20.00

COST

$50.00

MARKUP

40.00%

MARGIN

28.57%

QTY PROFIT

$2,000.00

LIVE DIAGRAM

SELLING PRICE

$70.00

MARKUP

40.00%

MARGIN

28.57%

GROSS PROFIT

$20.00

PRICE COMPOSITION

COST

PROFIT

Cost: $50.00 (71.4%)

Profit: $20.00 (28.6%)

MARKUP vs MARGIN — KEY DIFFERENCE

Markup (on cost)40.00%

Margin (on price)28.57%

Markup is always higher than margin. At 40.00% markup, your margin is only 28.57%.

COST

$50.00

SELLING PRICE

$70.00

GROSS PROFIT

$20.00

MARGIN

28.57%

Live diagram · updates as you type

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BULK ORDER P&L — 100 UNITS

COST $50.00 · PRICE $70.00 · MARKUP 40.00% · MARGIN 28.57%

Quantity	100 units
Cost per Unit	$50.00
Price per Unit	$70.00
Profit per Unit	$20.00
Total Revenue	$7,000.00
Total Cost	$5,000.00
Total Gross Profit	$2,000.00
Markup	40.00%
Gross Margin	28.57%

MARKUP vs MARGIN REFERENCE TABLE

PRICE AT EACH MARKUP LEVEL ASSUMING $100 COST

MARKUP %	MARGIN %	PRICE ($100 COST)	EXAMPLE ($50 COST)
10%	9.09%	$110.00	$55.00
20%	16.67%	$120.00	$60.00
25%	20.00%	$125.00	$62.50
30%	23.08%	$130.00	$65.00
40% ←	28.57%	$140.00	$70.00
50%	33.33%	$150.00	$75.00
60%	37.50%	$160.00	$80.00
75%	42.86%	$175.00	$87.50
100%	50.00%	$200.00	$100.00
150%	60.00%	$250.00	$125.00
200%	66.67%	$300.00	$150.00

Markup % = profit ÷ cost. Margin % = profit ÷ price. Markup is always higher than margin for the same product.

HOW TO USE

1
Select your solve mode — choose what you already know: Cost + Markup %, Cost + Margin %, Cost + Price, Price + Markup %, or Price + Margin %. The calculator solves for everything else.
2
Enter your two known values. Cost is what you pay to produce or buy the product. Markup is the percentage added on top of cost. Margin is the percentage of the selling price that is profit.
3
Enter a quantity for the bulk P&L section — this shows total revenue, total cost, and total gross profit across multiple units.
4
The result box shows selling price, gross profit, markup %, margin %, and total profit at your quantity — all updating live as you type.
5
Scroll down to the Markup vs Margin Reference Table to see the margin equivalent for every common markup level. Your current markup is highlighted. Use this table to find the right markup for your target margin.
6
Key insight: if you want a 30% margin, you cannot add 30% to your cost — you need a 42.86% markup. Use this calculator to avoid the most common pricing mistake in business.

WORKED EXAMPLE

Example: Cost $50, markup 40%. Selling price = $50 × 1.40 = $70.00. Gross profit = $70 − $50 = $20.00. Markup = $20 / $50 = 40%. Margin = $20 / $70 = 28.57%. Bulk (100 units): revenue = $7,000, cost = $5,000, gross profit = $2,000. Reverse from margin: to achieve 40% margin on a $50 cost item, markup = 40% / (100% − 40%) = 66.67%, price = $50 × 1.6667 = $83.33.

REFERENCE FORMULAS

FORMULA REFERENCE TABLE

NAME	FORMULA	DESCRIPTION
Selling Price (from markup)	Price = Cost × (1 + Markup / 100)	Add markup percentage to cost to get selling price
Selling Price (from margin)	Price = Cost ÷ (1 − Margin / 100)	Divide cost by (1 − margin) to get price that achieves target margin
Cost (from price + markup)	Cost = Price ÷ (1 + Markup / 100)	Work backward from selling price and markup to find the cost
Cost (from price + margin)	Cost = Price × (1 − Margin / 100)	Work backward from selling price and margin to find the cost
Markup %	Markup = (Price − Cost) ÷ Cost × 100	Profit as a percentage of cost — always higher than margin
Margin %	Margin = (Price − Cost) ÷ Price × 100	Profit as a percentage of selling price — always lower than markup
Markup → Margin	Margin = Markup ÷ (100 + Markup) × 100	Convert markup percentage to margin percentage
Margin → Markup	Markup = Margin ÷ (100 − Margin) × 100	Convert margin percentage to markup percentage

FREQUENTLY ASKED QUESTIONS

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Disclaimer: This calculator computes gross profit margin and markup only — it does not account for operating expenses, overhead, or net profit. Always consult an accountant for full profitability analysis.

Last updated: April 25, 2026 · Formula verified by EagleCalculator team · Eagle-eyed accuracy for every calculation.