What is markup?
Markup is how much you add on top of your cost, as a percentage of that cost. A product that costs $20 with a 60% markup sells for $32, and the $12 you added is your profit.
It's popular because it's easy to apply: take your cost, add the same percentage every time, and you have a price. Shops, makers and resellers often price this way.
The formulas
Price = cost × (1 + markup). Markup = (price − cost) ÷ cost × 100. For a $20 cost and a 60% markup: $20 × 1.6 = $32.
Markup vs margin
Both start from the same profit, but markup divides it by the cost and margin divides it by the price. So the same sale always has a higher markup than margin. That $32 sale has a 60% markup but only a 37.5% margin.
To convert: margin = markup ÷ (100 + markup), and markup = margin ÷ (100 − margin), all in percent. Some common pairs:
- 25% markup = 20% margin
- 50% markup = 33.3% margin
- 100% markup = 50% margin
- 150% markup = 60% margin
- 200% markup = 66.7% margin
Choosing a markup
Start from your full cost per unit: materials, packaging, shipping you cover, and platform and payment fees. Then check the markup leaves room for your time and overheads. Many retailers double their cost, a 100% markup, sometimes called keystone pricing. Handmade and digital products often go higher, while resold goods with lots of competition can sit lower.
Frequently asked questions
How do I calculate markup?
Subtract cost from price, divide by cost, and multiply by 100. A $30 item that costs $20 has a 50% markup.
How do I add a markup to a price?
Multiply your cost by 1 plus the markup. A $20 cost with a 40% markup is $20 × 1.4 = $28.
What's the difference between markup and margin?
Markup is profit as a share of the cost. Margin is profit as a share of the price. A 100% markup is a 50% margin.
What markup gives a 50% margin?
A 100% markup, which means doubling your cost. A 40% margin needs about a 66.7% markup.
What is a good markup?
It depends on what you sell. Many shops use around 100%, handmade and digital products often go higher, and competitive resold goods can be lower.