Markup Calculator

Markup is profit divided by COST. Margin is profit divided by SELLING PRICE. A 50% markup does NOT equal 50% margin. Example: $10 cost, $15 price. Markup = ($5/$10) = 50%. Margin = ($5/$15) = 33.3%. Businesses often confuse these — always clarify which you mean.

Margin = Markup / (1 + Markup). Example: 50% markup = 50/150 = 33.3% margin. To convert margin to markup: Markup = Margin / (1 - Margin). 33.3% margin = 0.333/0.667 = 50% markup. Use this conversion when comparing prices with suppliers vs. customers.

It varies enormously by industry. Grocery stores: 5-25%. Retail clothing: 50-100%+. Jewelry: 100-300%. Restaurants: 200-400% on food. Software: often infinite (cost of goods is near zero). The right markup depends on: industry norms, competition, customer willingness to pay, and your overhead costs.

When you tell a customer your price includes a 50% margin, they expect $1 to become $1.50 (50% of $1). When a supplier offers a product with 50% markup, they mean cost $1, sell at $1.50. The confusion is real and costly — businesses have lost money quoting the wrong metric to partners.

Markup must cover not just profit but also overhead: rent, salaries, utilities, marketing, insurance. If overhead is 30% of revenue, you need at least 30% margin (43% markup) just to break even. A common formula: Price = (Cost + Overhead Allocation) / (1 - Desired Profit Margin).