Loading page...
business calculator
Calculate markup and margin from cost and selling price.
Save this tool to verify product pricing structures and maintain target profit margins.
Profit
$40
Summary
Markup Rate
50.00%
Profit Margin
33.33%
Gross Profit
$40
Cost-to-Price Ratio
66.67%
D3 visualization
Compare wholesale cost against the profit markup added.
D3 visualization
Profit margin is calculated relative to selling price, while markup is relative to wholesale cost.
Guide
Markup is the premium a business adds to the wholesale cost of a product to determine its final retail price. Charging an adequate markup ensures that a company can cover overhead costs and generate net profit.
While markup is written as a percentage of cost, it is closely tied to margin. Pricing calculations should verify both parameters so selling prices are competitive while maintaining operational viability.
Wholesale cost
The amount paid by a retailer to buy inventory from manufacturers or distributors.
Keystoning
A standard retail pricing rule of doubling wholesale cost for a 100% markup.
Subtract wholesale cost from selling price to get gross profit, divide profit by cost, and multiply by 100. For example, cost is $40 and selling price is $60: profit is $20, so markup is ($20 / $40) x 100 = 50%.
Keystoning is a pricing strategy where merchandise is priced at double the wholesale cost, resulting in a flat 100% markup or a 50% profit margin.
Formula
Markup = profit / cost; Margin = profit / selling priceMarkup and margin both describe profit, but they use different denominators.
Step by step
Example
A product costing $80 and selling for $120 has $40 profit, 50% markup, and 33.33% margin.
Related guides
Guide
Understand the critical difference between markup and margin, how discount depth affects profit, and strategic pricing approaches to maximize revenue and profitability.
Guide
Learn how to calculate gross margin, operating margin, and net profit margin. Understand what each margin reveals about your business financial health and efficiency.