What is markup?
Markup is how much you add on top of what a product costs you. It is calculated on the cost: buy a product for $12, add a 150% markup ($18) and you sell it for $30. Retailers, restaurants, wholesalers and makers use markup because it is quick — you start from the cost you already know.
Markup formulas
- Selling price = cost × (1 + markup %) — $12 × 2.5 = $30 for a 150% markup
- Markup % = (price − cost) ÷ cost × 100 — ($30 − $12) ÷ $12 = 150%
- Margin from markup = markup ÷ (1 + markup) — 150% markup = 60% margin
Common markups and what they mean
| Markup | Price for a $10 cost | Margin |
|---|---|---|
| 50% | $15.00 | 33.3% |
| 100% (keystone) | $20.00 | 50% |
| 150% | $25.00 | 60% |
| 200% | $30.00 | 66.7% |
| 300% | $40.00 | 75% |
“Keystone pricing” — doubling the cost, a 100% markup — is a classic retail rule of thumb that gives a 50% margin.
Charm pricing: .99 and .95
Prices ending in .99 or .95 tend to feel cheaper to shoppers. Choose a rounding option and every price is moved up to the next .99, .95 or whole number, so you never round below your target markup.
Do not forget selling fees
If you sell on Amazon, eBay, Etsy or another marketplace, part of your markup goes to fees. Choose the platform in step 2 to see the real margin you keep after the marketplace’s cut.
Markup vs margin
Both compare profit to something, but not to the same thing:
- Markup compares profit to the cost: (price − cost) ÷ cost.
- Margin compares profit to the price: (price − cost) ÷ price.
Buy at 12, sell at 30: profit 18 is a 150% markup but a 60% margin.
Quick conversion table
| Markup | Margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
Two modes
- Cost + markup → price: cost 12 with a 50% markup = price 18.
- Cost + price → markup: see the markup and margin of a price you already use.
When to use which
Shops and wholesalers often think in markup (“we add 50%”). Accountants and investors talk about margin. Mixing them up is a common reason small businesses price too low — a “50% profit” on cost is only a 33% margin.