Pricing Markup Calculator
Example: Unit cost: 40 $ · Markup percentage: 50 %
| Selling price | $60 |
| Profit per unit | $20 |
| Gross margin | 33.33% |
Worked example
Take a product that costs you $40 and apply a 50% markup. The selling price is $40 x 1.50 = $60, giving $20 of profit per unit. But that 50% markup is only a 33.3% gross margin, because margin is figured on the selling price, not the cost. Understanding that gap is what keeps a markup-based price from silently underperforming.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A 50% markup equals a 33.3% margin. Confusing the two is a common way businesses underprice.
What markup should I use?
It varies by industry: many retailers use 50 to 100%, while food service and specialty goods often go higher. Base yours on covering all costs, staying competitive, and hitting the margin your business needs to be sustainable.
Does markup cover all my costs?
Markup is applied to the unit cost of the product itself. Make sure your unit cost includes landed cost and that your overall pricing also covers overhead, marketing, and fees, not just the product cost.
How do I convert a target margin into a markup?
Use markup = margin / (1 minus margin). A 40% target margin needs about a 66.7% markup. Our margin-to-markup converter does this automatically.