Convert between markup and margin, calculate selling prices from cost, and determine profit percentages for business pricing
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Understanding the difference between markup and margin is crucial for profitable pricing. Our calculator converts between the two, helping you set prices that meet your profit goals. Enter cost and markup to find selling price, or work backwards from any combination.
Markup is the percentage added to cost to get selling price. Margin is the percentage of selling price that is profit. A 50% markup on a $10 item means selling at $15 ($5 profit). But the margin is only 33.3% because profit ($5) is 33.3% of the $15 selling price.
Key Formulas
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Neither is better—they measure the same profit differently. Markup relates profit to cost (what you paid), while margin relates profit to revenue (what you received). Most retailers use margin for financial reporting but markup for pricing.
It varies by industry. Grocery stores average 1-3%, restaurants 3-9%, retail 2-10%, and software can exceed 80%. Research your industry benchmarks and factor in all operating costs.
Margin = Markup / (100 + Markup) × 100. For example, 50% markup: 50 / 150 × 100 = 33.3% margin. Conversely, Markup = Margin / (100 - Margin) × 100.
Keystone pricing is a 100% markup (or 50% margin), doubling the wholesale cost. Common in retail, though many businesses now use variable markups based on product category and competition.
Basic margin calculations use only product cost. Gross margin excludes overhead, while net margin includes all expenses. This calculator shows gross margin—remember to account for operating costs separately.