OneTaskBy Tim King · Updated
Markup Calculator
Sale Price from Cost and Markup
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How the Markup Calculator works
This markup calculator gives the selling price and the margin it equals. Enter what an item costs you and the markup you apply to get the sale price, the gross profit and the margin that markup actually produces. Switch the mode to go the other way: give a cost and a sale price you already charge, and the calculator returns the markup percentage hiding inside it.
Markup calculator: cost plus a percentage
Markup is the percentage you add to what something cost you. It is the number a supplier quotes, the number a trade price list is built on and the number almost every cost-plus pricing rule in a small business is written in. It is not the same number as your margin, and mixing the two up is one of the most common pricing mistakes there is.
Why it matters. Pricing is usually set from a cost sheet, so markup is the natural number to work in. Your targets, loan covenants and industry benchmarks, however, are almost always quoted as margin. A shop that marks cost up by 40% believing it has made a 40% margin has actually made 28.6%. On $100,000 of stock that gap is $11,400 of profit that was budgeted and never appeared. This calculator prints markup and margin side by side so the conversion is never done in your head.
The markup percentage formula
Markup = (sale price − cost) ÷ cost. Going the other way, sale price = cost × (1 + markup).
Worked example. Buy a part for $40 and sell it for $60. The $20 profit is 50% of the $40 you paid, so that is a 50% markup. Going forwards, a 50% markup on $40 is $40 × 1.5 = $60. That multiplier is the whole of cost-plus pricing: you can apply it to a cost sheet without knowing what the final price will be.
The same sale is also a margin. That $60 sale carries a 33.3% margin, because margin divides the same $20 profit by the $60 price instead of the $40 cost. Both describe one transaction. The price is always bigger than the cost, so the margin percentage is always the smaller of the two.
Markup to margin converter
- Markup to margin: markup ÷ (1 + markup). A 30% markup is 0.30 ÷ 1.30 = 23.1% margin.
- Margin to markup: margin ÷ (1 − margin). A 30% margin needs 0.30 ÷ 0.70 = 42.9% markup.
A second example: how many percent do I add to hit a 25% margin? Divide 0.25 by 0.75 to get 33.3%. Mark a $90 cost up by a third and you sell at $120, keeping $30, which is 25% of the price. For the reverse question, starting from a target margin, use the margin calculator.
Pairs worth knowing by heart: 25% markup = 20% margin, 50% markup = 33.3% margin, 100% markup = 50% margin and 150% markup = 60% margin.
Cost plus markup: sale price from cost
Table: markup, multiplier and the margin it produces, on a $40 cost
| Markup | Multiply cost by | Margin produced | Price on $40 cost |
|---|---|---|---|
| 5% | 1.05 | 4.8% | $42.00 |
| 10% | 1.10 | 9.1% | $44.00 |
| 15% | 1.15 | 13.0% | $46.00 |
| 20% | 1.20 | 16.7% | $48.00 |
| 25% | 1.25 | 20.0% | $50.00 |
| 30% | 1.30 | 23.1% | $52.00 |
| 35% | 1.35 | 25.9% | $54.00 |
| 40% | 1.40 | 28.6% | $56.00 |
| 45% | 1.45 | 31.0% | $58.00 |
| 50% | 1.50 | 33.3% | $60.00 |
| 60% | 1.60 | 37.5% | $64.00 |
| 70% | 1.70 | 41.2% | $68.00 |
| 75% | 1.75 | 42.9% | $70.00 |
| 80% | 1.80 | 44.4% | $72.00 |
| 90% | 1.90 | 47.4% | $76.00 |
| 100% | 2.00 | 50.0% | $80.00 |
| 125% | 2.25 | 55.6% | $90.00 |
| 150% | 2.50 | 60.0% | $100.00 |
| 175% | 2.75 | 63.6% | $110.00 |
| 200% | 3.00 | 66.7% | $120.00 |
| 250% | 3.50 | 71.4% | $140.00 |
| 300% | 4.00 | 75.0% | $160.00 |
Read the third column before quoting a markup as a margin. Even a 300% markup is only a 75% margin, and a 40% markup is not much more than a quarter.
Where markup is used. Trades and contractors price materials at cost plus 10–30% and labour separately. Wholesalers and distributors typically work on 15–50%. General retail often uses "keystone", doubling the cost, which is a 100% markup and a 50% margin. Restaurants aim for food costs of roughly 28–35% of the menu price, a markup of about 185–255%, and bars run well above that on spirits. Jewellery and eyewear routinely run in the hundreds.
How to read the result.
- Sale price is what to charge. In "Cost and sale price" mode it simply echoes the price you entered.
- Gross profit is price minus cost in dollars. It is before rent, wages, card fees and tax, so it is not what you take home.
- Markup is profit as a share of cost. It can be any size, including over 100%.
- Margin is profit as a share of price. It can never reach 100%, and it is the figure to compare with benchmarks and your break-even point.
A negative markup means you are selling below cost. That is sometimes deliberate for a loss leader, but it should never be an accident.
Tips and pitfalls.
- Mark up the landed cost. Include freight, duty, packaging and card fees. A markup on the bare invoice price overstates profit on every sale.
- Trade discounts are not markups. Buying at "list less 40%" ($60 off a $100 list) and selling at list is a 66.7% markup, not 40%.
- "300% margin" is impossible. A margin cannot exceed 100% because profit is a slice of the price. If a percentage sounds impossible, it is a markup being called a margin.
- Discounts bite harder than they look. A 20% sale on a 50% markup cuts the margin from 33.3% to 16.7%, half the profit. Check with the discount calculator before running a promotion.
- Tax sits outside markup. Work on prices before sales tax, VAT or GST, then add it.
For a longer look at why the two figures diverge, read margin vs markup.
FAQ
How do I calculate markup percentage?
Subtract the cost from the sale price, then divide by the cost. A part bought for $40 and sold for $60 gives $20 ÷ $40 = 0.5, so the markup is 50%. To find the price instead, multiply the cost by one plus the markup.
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a $40 cost gives a $60 price and a $20 profit, which is only a 33.3% margin because the margin measures that profit against the sale price. Markup is always the larger of the two percentages on any profitable sale.
How do I convert markup to margin?
Divide the markup by one plus the markup. A 30% markup becomes 0.30 ÷ 1.30 = 23.1% margin. Going back the other way, divide the margin by one minus the margin, so a 23.1% margin requires a 30% markup to produce it.
Can a markup be over 100%?
Yes, and often is. Markup is a share of the cost, so it has no upper limit — doubling the cost is a 100% markup, and a $2 item sold for $40 is a 1,900% markup. Only margin is capped, because it cannot exceed the price it is measured against.
What markup do I need for a 40% margin?
Divide the margin by one minus the margin: 0.40 ÷ 0.60 is 0.667, so a 66.7% markup. On a $60 cost that is a $100 sale price, which is the same answer as dividing the cost by 0.6. Applying a 40% markup instead gives $84 and a margin of only 28.6%.
What is a typical retail markup?
Keystone, a 100% markup, is the traditional starting point for clothing, gifts and jewellery. Groceries run far lower, often 10 to 30% on the cost, while restaurants and bars commonly mark up food and drink by 200 to 400%. Landed cost, competition and how quickly stock turns over matter more than any rule of thumb.
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