SuanSupplyWhat is markup?
Markup is the amount you add to your cost to set a selling price, shown as a percentage of the cost. If a product costs you $10 and you sell it for $16, you added $6, which is a 60% markup. Retailers, wholesalers, makers and contractors all use markup because it starts from the number they know best: what something cost them.
How do you calculate markup?
With the calculator's example numbers: a $10 cost with a 60% markup gives $10 × 1.60 = $16.00. If you already sell at $24.99, your markup is ($24.99 − $10) ÷ $10 = 149.9%.
What is the difference between markup and margin?
Both compare profit with a price, but from different starting points. Markup divides profit by cost. Margin divides profit by the selling price. The same $6 profit on a $10 item sold for $16 is a 60% markup but only a 37.5% margin. Mixing them up is one of the most common pricing mistakes: a business that "adds 40%" to cost and thinks it has a 40% margin really has about 28.6%.
Markup to margin conversion table
| Markup | Profit margin | Price for a $10 cost |
|---|---|---|
| 25% | 20.0% | $12.50 |
| 33.3% | 25.0% | $13.33 |
| 50% | 33.3% | $15.00 |
| 66.7% | 40.0% | $16.67 |
| 100% (keystone) | 50.0% | $20.00 |
| 150% | 60.0% | $25.00 |
| 200% | 66.7% | $30.00 |
| 300% | 75.0% | $40.00 |
How much markup should you use?
There is no single right markup. It has to cover everything the cost price leaves out, then leave a profit:
- Selling fees such as Etsy, Amazon, eBay or card processing, which are charged on the selling price.
- Shipping, packaging and returns you pay for.
- Advertising. A sale that came from an ad costs more than one that didn't.
- Your time and overhead, if they are not already in the cost.
- Wholesale. If stores will buy from you, your retail price usually needs to be about double your wholesale price, so check that both leave a profit.
A quick way to set a markup: decide the margin you need after fees, then convert it with the formula above. For handmade products, our guide on starting an Etsy shop and the Etsy fee calculator help you see what is left after fees.
What counts as cost?
Use the full cost of getting one unit ready to sell: materials or the supplier price, inbound shipping, duties, packaging and labels. For imported products that is the landed cost, which you can work out with our landed cost calculator. A markup on a cost that leaves things out will look healthy and still lose money.
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Frequently asked questions
What is markup in simple terms?
Markup is how much you add to what something cost you, as a percentage of that cost. A $10 cost sold for $15 has a $5 markup, or 50%.
How do I calculate markup percentage?
Subtract the cost from the selling price, divide by the cost and multiply by 100. ($16 − $10) ÷ $10 × 100 = 60%.
How do I convert margin to markup?
Markup = margin ÷ (1 − margin). A 40% margin is 0.40 ÷ 0.60 = 66.7% markup. To go the other way, margin = markup ÷ (1 + markup).
What is a 100% markup?
A 100% markup doubles the cost: a $10 cost sells for $20. In retail this is called keystone pricing, and it equals a 50% profit margin.
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a $10 cost gives a $15 price and a 33.3% margin. A 50% margin needs a $20 price, which is a 100% markup.
Can markup be more than 100%?
Yes. Markup has no upper limit because it is measured against cost. Margin can never reach 100%, because it is measured against the price.
This calculator gives estimates for planning. Rounding can change the last cent. Check your real costs and fees before setting prices.