Ecommerce & Revenue

Markup Calculator

Markup is how buyers and suppliers usually talk about pricing, and margin is how the profit and loss statement talks about it. This converts between the two so you can price in one language and forecast in the other.

Your numbers

Result

Selling price$92.40
Profit per unit$50.40
Resulting gross margin54.5%
Total profit$40,320

FormulaPrice = cost × (1 + markup %). Margin % = markup ÷ (100 + markup) × 100

Worked example

A $42 unit cost with a 120 percent markup prices at $92.40 and earns $50.40 per unit. That markup produces a 54.5 percent gross margin, not a 120 percent one, and across 800 units it is $40,320 of gross profit. The markup number always looks bigger than the margin it creates, which is exactly why suppliers prefer quoting it.

What to watch for

A useful shortcut: a 100 percent markup is a 50 percent margin, a 50 percent markup is a 33 percent margin, and a 200 percent markup is a 67 percent margin. Committing those three to memory prevents most pricing mistakes.

Uniform markup across a catalogue is easy and usually wrong. Price sensitivity varies enormously by item, so I set markup by product role, with hero items priced for competitiveness and accessories priced for margin.

If you plan to run discounts, build the expected discount into the markup up front. Setting price for the full-price scenario and then running 20 percent off every month means you never actually earned the margin in your plan.

Frequently asked questions

What markup should I use?

Work backwards from the gross margin your business needs to cover acquisition and overhead, then convert that margin to a markup. Starting from a habitual markup number and hoping the margin works out is the wrong order of operations.

Why does a 50 percent markup only give a 33 percent margin?

Because markup is measured against the smaller number. A $100 cost with 50 percent markup sells for $150, and the $50 profit is 50 percent of the cost but only 33 percent of the $150 price.

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