What is markup?
Markup is the amount you add to the cost of an item to set its selling price, expressed as a percentage of the cost. A product that costs $40 with a 150% markup sells for $100. The same product has a 60% gross margin.
Markup to margin conversion
Markup and margin describe the same price from different sides. Markup is based on cost; margin is based on price. The gap widens as markup rises, which is why a "100% markup" is only a 50% margin.
| Markup |
Margin |
Price on a $40 cost |
| 20% |
16.7% |
$48.00 |
| 25% |
20.0% |
$50.00 |
| 33% |
25.0% |
$53.33 |
| 50% |
33.3% |
$60.00 |
| 75% |
42.9% |
$70.00 |
| 100% |
50.0% |
$80.00 |
| 150% |
60.0% |
$100.00 |
| 200% |
66.7% |
$120.00 |
| 300% |
75.0% |
$160.00 |
| 400% |
80.0% |
$200.00 |
A 30% markup is not a 30% margin. A 30% markup on a $100 cost gives a $130 price and a 23.1% margin. A 30% margin on the same cost needs a $142.86 price, which is a 42.9% markup.
Reverse markup: cost from price
Buyers and wholesale teams often need the formula the other way round. If the price and the markup are known, the cost is price ÷ (1 + markup). A $150 price at a 50% markup implies a $100 cost. The calculator's Selling price mode does this for you: enter cost and price, and it reports both markup and margin.
Keystone pricing and typical markups by category
Keystone pricing is a 100% markup (doubling the wholesale cost), the traditional retail default. Many categories price well above or below it.
Apparel
100% to 150%
keystone or higher
Jewelry
200% to 400%
highest in retail
Electronics
10% to 30%
thin, volume driven
Restaurants
200% to 300%
on food cost
Cosmetics
150% to 300%
brand driven
Dropshipping
30% to 100%
ad spend absorbs most of it
The markup you need is higher than the margin you want
Markup has to cover more than the product. Payment processing takes 2.9% + $0.30 of the price. Refunds cost you the fee and the shipping. Chargebacks cost the sale, the fee and a dispute fee. The calculator's advanced panel subtracts each from the gross profit so you can see whether a markup clears your real costs.
+45 pts
Extra markup needed to keep a 50% margin after costs
On a $40 cost with $5 shipping absorbed, 2.9% + $0.30 processing, 3% refunds and 0.5% chargebacks, a 100% markup ($80 price) yields a 39.6% real margin. Holding a 50% real margin needs a 145% markup, about $98.
Markup by sales channel
Marketplaces take a bigger cut than a card processor, so the same margin target needs a different markup on each channel. Here is the markup that leaves a 50% margin after channel fees on a $40 cost, before shipping, refunds and ads.
Own store
114% markup
$85.56 price, 2.9% + $0.30 processing
Etsy
150% markup
$99.88 price, $0.20 listing + 6.5% + 3% + $0.25
eBay
177% markup
$110.99 price, 13.6% + $0.40 per order
Amazon
186% markup
$114.29 price, 15% referral fee, most categories
Keystone pricing on Amazon leaves a 35% margin, not 50%. Amazon's referral fee already covers payment processing; FBA fees come on top. Set the markup per channel instead of copying the store price across listings.
How to set a markup
Start from the target margin, not a round markupDecide the margin you need, then convert: markup = margin ÷ (1 − margin). A 60% margin needs a 150% markup.
Load the cost with landed and payment costsAdd inbound shipping, duties, packaging, and the processing fee per unit before applying markup.
Check the price against the marketA markup that clears costs but lands 30% above competitors needs a positioning reason.
Test with the advanced panelTurn on refunds and chargebacks at your real rates and read the real margin line.
Review quarterlyInterchange, shipping and dispute rates all move; a markup set last year drifts.
Frequently asked questions
How do I calculate markup percentage?
Subtract cost from price, divide by cost, multiply by 100. A $100 price on a $40 cost is (100 − 40) ÷ 40 = 150% markup.
What is the difference between markup and margin?
Markup divides profit by cost; margin divides profit by price. A 100% markup equals a 50% margin. Margin is always smaller than markup for the same price.
What is keystone pricing?
Pricing at double the wholesale cost, a 100% markup and a 50% margin. It is the traditional retail starting point for apparel, gifts and home goods.
How do I convert margin to markup?
Markup = margin ÷ (1 − margin). A 40% margin is 0.4 ÷ 0.6 = 66.7% markup.
What markup should I use for my online store?
Enough to cover product cost, payment fees, shipping, refunds, chargebacks and marketing, and still leave 5% to 10% net. For most physical products that is 100% to 200% on landed cost.
Should markup include payment processing fees?
Yes. Processing fees are a cost of every sale. Either add the per-unit fee to cost before applying markup, or use the calculator's real margin line to check the result.
What is a 50% markup on $100?
A 50% markup on a $100 cost adds $50, so the selling price is $150. The margin on that sale is $50 ÷ $150 = 33.3%. If the $100 is the selling price, a 50% markup implies a $66.67 cost.
How do I add a 20% markup?
Multiply the cost by 1.2. A $40 cost with a 20% markup sells for $48. In a spreadsheet, the formula is cost × (1 + 0.2). The margin on that price is 16.7%, so check that it still covers fees and shipping.
Is a 30% markup the same as a 30% margin?
No. A 30% markup on a $100 cost is a $130 price and a 23.1% margin. A 30% margin on the same cost needs a $142.86 price, a 42.9% markup. Markup is always the larger number for the same sale.
Sources
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