Markup Calculator
The markup calculator helps you determine selling price, gross profit, and gross margin based on your cost and desired markup percentage.
Illustrative example: Cost 500.000, markup 40% → selling price 700.000, gross profit 200.000, gross margin 28.6%.
Markup is the percentage added to cost to determine the selling price. It is an essential tool for business owners, online sellers, and anyone who needs to price products or services.
Understanding the difference between markup and margin is crucial knowledge that many business people get wrong.
Markup calculation formulas
1. Calculate selling price from cost + markup %
Selling price = Cost × (1 + Markup% / 100)
Example: 500.000 × (1 + 40/100) = 700.000
Gross profit = Selling price − Cost = 700.000 − 500.000 = 200.000
2. Calculate markup % from cost and selling price
Markup% = ((Selling price − Cost) / Cost) × 100
Example: (700.000 − 500.000) / 500.000 × 100 = 40%
3. Gross Margin %
Gross Margin% = ((Selling price − Cost) / Selling price) × 100
Example: (700.000 − 500.000) / 700.000 × 100 = 28.6%
4. Markup vs Margin — the key difference
This is the most important distinction:
| Markup | Gross Margin | |
|---|---|---|
| Formula | (Price − Cost) / Cost | (Price − Cost) / Price |
| Denominator | Cost | Selling price |
| Result (700.000) | 40% | 28.6% |
| Meaning | % added to cost | % profit on revenue |
Markup 40% = Gross Margin 28.6%. Markup is always higher than margin (for the same price and cost).
Worked example: Pricing a handmade product
| Parameter | Value |
|---|---|
| Material cost | 200.000 |
| Labor cost | 150.000 |
| Shipping cost | 50.000 |
| Total cost | 400.000 |
| Desired markup | 50% |
Calculate selling price
- Selling price = 400.000 × (1 + 50%) = 600.000
- Gross profit = 600.000 − 400.000 = 200.000
- Gross Margin = (600.000 − 400.000) / 600.000 = 33.3%
Comparing markup levels
| Markup | Selling price | Profit | Gross Margin |
|---|---|---|---|
| 30% | 520.000 | 120.000 | 23.1% |
| 50% | 600.000 | 200.000 | 33.3% |
| 100% | 800.000 | 400.000 | 50.0% |
| 200% | 1.200.000 | 800.000 | 66.7% |
Frequently asked questions
What is the difference between markup and margin?
Markup = (Selling price − Cost) / Cost. Margin = (Selling price − Cost) / Selling price. Markup 40% equals margin 28.6%. Markup is always higher than margin for the same numbers.
Should I use markup or margin for pricing?
Use markup when you know your cost and want to add a percentage on top. Use margin when your target is profit as a percentage of revenue. Retail typically uses markup; services typically use margin.
What is a reasonable markup percentage?
It depends on the industry. Fresh food: 30-50%. Fashion: 100-300%. Services: 50-150%. Digital products: 500%+. Consider fixed costs, competition, and the value delivered to the customer.
Is markup the same as net profit?
No. Markup only accounts for gross profit. Net profit must also subtract operating expenses, marketing, taxes, rent, and other overhead costs.
How to calculate selling price for a target gross margin?
Selling price = Cost / (1 − Gross Margin%). Example: cost 500.000, target 40% gross margin → selling price = 500.000 / (1 − 0.4) = 833.333. Equivalent markup = 66.7%.
What is keystone pricing?
Keystone pricing is a 100% markup (doubling the cost). It is a standard practice in traditional retail. Selling price = cost × 2, gross margin = 50%. Simple but not always optimal.