Markup Calculator

The markup formula

Markup is the amount added to a cost to reach a price, expressed as a percentage of that cost. Selling price = cost × (1 + markup ÷ 100). An item costing $80 with a 25% markup sells for $80 × 1.25 = $100.

Run the other way, markup = (price − cost) ÷ cost × 100. Something bought for $12 and sold for $18 carries a $6 markup on a $12 cost: 50%.

It helps to think of a markup as a multiplier. A 50% markup multiplies the cost by 1.5, a 100% markup by 2, a 150% markup by 2.5. The calculator shows the multiplier under the selling price, and the equivalents table lists it for each common markup.

Keystone pricing

Keystone pricing means doubling the wholesale cost: a 100% markup, which is a 50% margin. It is a long-standing convention in retail, particularly in gifts, apparel and jewellery, because it is simple to apply across a whole range and leaves room for the costs a shop carries beyond the stock itself.

Keystone is a starting point rather than a law. Retailers distinguish between the initial markup — the one on the price tag when the stock arrives — and the maintained markup they actually achieve after end-of-season reductions, damaged stock and theft. A shop that expects to clear a fifth of its stock at half price needs an initial markup well above its target to end up there.

For fast-moving or easily compared goods, keystone is often too high to compete; for one-off, slow-selling or high-service items it can be too low. Enter 100% to see the keystone price, then try the markups your competitors' prices imply.

Why the markup always overstates your margin

Markup is measured against the cost, margin against the price. Because the price is the bigger number, the same profit is always a smaller percentage of it. A 25% markup is a 20% margin; a 40% markup is a 28.6% margin; a 100% markup is a 50% margin.

That gap matters when you set markups against overheads, which are normally measured as a share of sales. If rent, wages and everything else take 30% of your revenue, a 40% markup sounds safe and is not: it leaves a 28.6% gross margin, below the 30% you need to break even. To keep 30% of every sale you need a markup of 42.86%.

If you are working to a target margin, choose "Cost and the margin I want" instead, and the calculator gives you the markup that hits it.

Markups and discounts undo each other unevenly

A markup and a discount of the same percentage do not cancel. Mark an $80 item up by 25% to $100, then run a 25% off sale, and it sells for $75 — below cost. The discount that exactly undoes a markup is smaller: markup ÷ (1 + markup). A 25% markup is wiped out by a 20% discount, and a 100% keystone markup by a 50% one.

So the question to ask before promising a sale is what margin is left afterwards. A keystone item at 30% off still makes a 28.6% margin; at 40% off it makes 16.7%; at 50% off it makes nothing at all. The discount calculator works out the sale price, and this one tells you what that price still earns.

Cost-plus pricing: when it works

Pricing by markup is cost-plus pricing, and it has real strengths. It is simple, it guarantees every sale covers its direct cost, and it is easy to defend to a customer who can see the cost. That is why it is common in contracting, manufacturing quotes and wholesale.

Its weakness is that it ignores what customers are willing to pay. A product people value highly can be sold well above cost-plus, and one in a crowded market may not sell at cost-plus at all. Use the markup to set the floor, then check the price against the market.