The markup formulas
Markup % = [ (Price − Cost) ÷ Cost ] × 100
Cost = Price ÷ (1 + Markup ÷ 100)
- Cost
- What you paid
- Price
- What you sell for
- Markup
- Profit as a share of cost
All three are rearrangements of the same relationship. Switch the mode above to solve for whichever value you do not have.
Markup and margin are different numbers
Markup measures profit against cost. Margin measures the same profit against selling price. Because the price is always larger than the cost, markup is always the bigger percentage.
Same $40 profit. The percentages differ only because the denominator differs.
Markup = Margin ÷ (100 − Margin) × 100
| Markup | Margin | Price on $100 cost |
|---|---|---|
| 20% | 16.7% | $120 |
| 25% | 20.0% | $125 |
| 33.3% | 25.0% | $133 |
| 50% | 33.3% | $150 |
| 66.7% | 40.0% | $167 |
| 100% | 50.0% | $200 |
| 150% | 60.0% | $250 |
| 233% | 70.0% | $333 |
Choosing a markup
Markup has to cover more than the cost of the item. It must also fund overheads, shrinkage, returns, discounting and the profit you intend to keep. A markup set purely to cover cost plus a target profit will not survive contact with reality.
| Sector | Typical markup |
|---|---|
| Grocery | 10% – 25% |
| Consumer electronics | 20% – 40% |
| Clothing retail | 100% – 300% |
| Restaurant food | 200% – 300% |
| Restaurant drinks | 300% – 500% |
| Jewellery | 100% – 500% |
| Furniture | 100% – 200% |
| Books | 30% – 50% |
See the profit margin calculator for the business-level view, and the break-even calculator to find the volume that covers your fixed costs.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost. Margin is the same profit as a percentage of the selling price. A $60 item sold at $100 has a 66.67% markup and a 40% margin.
Markup is always the larger number, because cost is always smaller than price.
How do I convert markup to margin?
Margin = Markup ÷ (100 + Markup) × 100. So a 50% markup gives 50 ÷ 150 × 100 = 33.3% margin.
Reversing it: Markup = Margin ÷ (100 − Margin) × 100. A 40% margin needs a 66.67% markup.
What is a good markup percentage?
It varies enormously — 10% in grocery, 300% in restaurants. What matters is that markup covers cost of goods, overheads, expected discounting and returns, and still leaves target profit.
Work backwards from the margin you need rather than picking a markup number and hoping.
Can markup be more than 100%?
Yes, and it commonly is. A 100% markup means you double the cost. Restaurants routinely run 300% markups on drinks; a 200% markup means selling at three times cost.
Margin, by contrast, can never reach 100% — that would mean the item cost nothing.