Markup &
Margin Calculator

Markup is the percentage added to the cost price of a product to arrive at the selling price. It is calculated relative to the cost: Markup % = (Selling Price − Cost) ÷ Cost × 100. For example, if you buy an item for $50 and sell it for $75, the markup is $25 ÷ $50 = 50%. Markup is the standard measure used when you start with a cost and want to determine what to charge customers.

Margin (also called gross margin or profit margin) is the percentage of the selling price that is profit. It is calculated relative to the selling price: Margin % = (Selling Price − Cost) ÷ Selling Price × 100. Using the same example — buy for $50, sell for $75 — the margin is $25 ÷ $75 = 33.33%. Margin reflects what portion of every dollar of revenue you keep as gross profit.

Markup and margin measure the same profit dollars from two different perspectives. Markup compares profit to cost; margin compares profit to revenue. A 50% markup always corresponds to a 33.33% margin. A 100% markup equals a 50% margin. Because they use different denominators, the same profit can look dramatically different depending on which measure you use — this is why the two numbers are often confused. Always confirm which measure a vendor, accountant, or report is using.

Margin % = Markup % ÷ (1 + Markup % ÷ 100) × 100. Example: 50% markup → 50 ÷ 1.5 × 100 ≈ 33.33% margin. Alternatively, use this calculator in reverse mode: enter your cost and the markup %, then read the margin % from the results.

Markup % = Margin % ÷ (1 − Margin % ÷ 100) × 100. Example: 33.33% margin → 33.33 ÷ 0.6667 × 100 ≈ 50% markup. Again, the reverse calculator mode handles this automatically — enter your cost and desired margin % to instantly see the equivalent markup %.

It depends entirely on your industry and cost structure. Retail typically uses markups of 50%–100% (keystone pricing doubles the cost). Software and digital products often see 200%–1000%+ markups because marginal costs are near zero. Food service commonly targets 60%–80% markup on food items. The right markup covers all your overhead, pays you a salary, and leaves profit. Use this calculator to work backwards: start with your desired margin and find the markup that achieves it.

Keystone pricing is a retail rule of thumb that sets the selling price at exactly double the cost, resulting in a 100% markup and a 50% gross margin. It is called keystone because the 50% margin was historically considered the cornerstone of a profitable retail business. Many brick-and-mortar retailers still use keystone as a starting point, then adjust up or down based on competition and demand.

For LLC owners, markup directly affects gross profit, which flows through to your Schedule C or partnership return and determines your self-employment tax base. A higher markup increases gross profit but your net profit (and tax liability) depends on how much of that gross profit is consumed by operating expenses. Use accurate markup calculations to model your taxable income before setting prices, especially for LLCs taxed as sole proprietors or partnerships.