Markup Calculator

Enter your cost and a markup percentage and the calculator returns the selling price (cost × (1 + markup ÷ 100)), the profit per unit, and the profit margin that price produces. With the defaults, a $60 cost and a 40% markup give a $84 selling price, $24 profit and a 28.57% margin.

That last line is the one to watch. Markup is profit as a share of cost; margin is profit as a share of the selling price. Because the price is always bigger than the cost, the margin is always smaller than the markup.

Margin = markup ÷ (100 + markup) × 100. Every figure below comes from that formula:

Going the other way, markup = margin ÷ (100 − margin) × 100. A 20% margin needs a 25% markup, 30% needs 42.86%, 40% needs 66.67%, 50% needs 100% and 60% needs 150%.

Say your plan calls for a 40% margin and your item costs $60. Typing 40% into a markup field gives $84, which is only a 28.57% margin. On 1,000 units that is $16,000 less gross profit than you planned.

To hit a margin target, either enter the converted markup from the table (66.67% here, giving $100), or price directly with cost ÷ (1 − margin): $60 ÷ 0.60 = $100.

Discounts make the gap worse, because they come off the price, not the cost. Mark the $60 item up 40% to $84, then run a 20% off sale: the price drops to $67.20, profit falls from $24 to $7.20 and the margin from 28.57% to 10.71%.

The cost you enter should be every cost it takes to get one unit ready to sell. Say the item costs $60 from the supplier, inbound freight works out to $4.50 a unit and packaging to $1.50. Your landed cost is $66, and a 40% markup on that gives $92.40.

If you had marked up only the $60 and sold at $84, your real profit would be $18, not $24, and your margin 21.43% instead of the 28.57% the calculator showed.

Two more things to keep in mind:

• Markups multiply along a supply chain. If a wholesaler adds 30% and the retailer adds 50% on top, the shelf price is 1.30 × 1.50 = 1.95 times the original cost, a 95% total markup, not 80%.
• Per-sale costs are not in the formula. Payment fees, marketplace commissions, shipping you absorb and returns all come out of the profit line, so your markup has to leave room for them.