Calculate markup percentage, find selling price from cost and markup, and compare markup vs margin side by side. The essential pricing tool for any business.
| Markup % | Margin % | Cost $60 | Sell Price | Profit |
|---|
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Markup is the foundation of pricing. It is the simplest way to set a selling price: take your cost, add a percentage, and that is your price. But simple does not mean easy to get right. The most common mistake in business pricing is confusing markup with margin — and that confusion costs thousands in lost profit. This guide explains markup clearly, shows you how it relates to margin, and gives you the benchmarks to price products correctly in any industry.
| Markup | Margin | Cost $60 | Sell Price | Profit |
|---|---|---|---|---|
| 15% | 13.0% | $60 | $69.00 | $9.00 |
| 25% | 20.0% | $60 | $75.00 | $15.00 |
| 50% | 33.3% | $60 | $90.00 | $30.00 |
| 75% | 42.9% | $60 | $105.00 | $45.00 |
| 100% (keystone) | 50.0% | $60 | $120.00 | $60.00 |
| 150% | 60.0% | $60 | $150.00 | $90.00 |
| 200% | 66.7% | $60 | $180.00 | $120.00 |
| 300% | 75.0% | $60 | $240.00 | $180.00 |
Scenario 1: Retail Clothing. Sarah buys wholesale t-shirts at $12 each. Industry standard is keystone markup (100%). Sell price: $12 × 2 = $24. Margin: 50%. She sells 500/month: $12,000 revenue, $6,000 gross profit. If her overhead is $4,000, net profit is $2,000 (16.7% net margin). Use our Break-Even Calculator to find her minimum units.
Scenario 2: Restaurant Menu Pricing. Marcus calculates his steak dish: food cost $14, target food cost 30% of menu price. Menu price = $14 / 0.30 = $46.67 (round to $47). That is a 235% markup. Sounds extreme, but after labor, rent, utilities, and overhead, net margin is typically 5-8%. The high markup covers the high cost of running a restaurant. Use our Profit Margin Calculator to see his true margins.
Scenario 3: E-Commerce Product. Priya sources phone cases from a manufacturer at $3.50 each. She sells on Amazon at $14.99. Markup: ($14.99 - $3.50) / $3.50 = 328% markup. But after Amazon fees ($4.50), shipping ($2), packaging ($0.50), and advertising ($2): net profit is $2.49/unit. Net margin: 16.6%. The headline markup of 328% becomes a modest 16.6% net margin after platform economics. Use our Price Per Unit Calculator to compare her true all-in costs.
Scenario 4: The Markup vs Margin Mistake. David runs a small business. His accountant says he needs 40% margins to cover overhead. David applies 40% markup to his $100 cost: $100 × 1.40 = $140. He thinks his margin is 40%. Actual margin: ($140 - $100) / $140 = 28.6%. He is 11.4 percentage points short of his target. To actually achieve 40% margin, he needs: $100 / (1 - 0.40) = $166.67 sell price (66.7% markup). This single error costs him $26.67 per unit in missing profit. Use our Discount Calculator to see how discounting affects his marked-up prices.
💡 Key insight: Markup and margin are two sides of the same coin, but confusing them is one of the most expensive mistakes in business. If someone says “we need 40% margins,” they do NOT mean 40% markup. They mean the selling price formula: Cost / (1 - 0.40). Always clarify which metric is being discussed before setting prices.
| Industry | Typical Markup | Equivalent Margin |
|---|---|---|
| Grocery / Supermarket | 5-25% | 5-20% |
| Electronics | 10-30% | 9-23% |
| Auto Parts | 30-50% | 23-33% |
| Clothing Retail | 100-300% | 50-75% |
| Furniture | 100-400% | 50-80% |
| Restaurants (food) | 200-400% | 67-80% |
| Jewelry | 100-300% | 50-75% |
| Software / SaaS | 500-5000%+ | 83-98%+ |
| 25% markup | 20% margin |
| 50% markup | 33.3% margin |
| 100% markup | 50% margin |
| 200% markup | 66.7% margin |
| 300% markup | 75% margin |