How to Calculate Markup (Without Confusing It With Margin)

Markup is profit divided by cost. Buy a candle for \$8, sell it for \$20: profit is \$12, markup is \$12 ÷ \$8 = 150%. That is the number wholesalers and many buyers still talk in — “keystone” is just a 100% markup (sell at 2× cost).

Worked example

Cost \$20. You want a 60% markup. Selling price = \$20 × (1 + 0.60) = \$32. Profit is \$12. If someone asks for the margin on that same ticket, it is \$12 ÷ \$32 = 37.5% — not 60%. Same dollars, different denominator.

The trap shops fall into

A mentor says “aim for a 40% margin.” You hear “40%,” open a markup sheet, and do cost × 1.40. That is a 40% markup, which is only about a 28.6% margin. You underpriced by a wide gap. If the target was really margin, price should be cost ÷ (1 − 0.40) — for \$20 cost, that is \$33.33, not \$28.

Handy pairs

If the two percentages ever look identical on a live deal, the sheet is wrong — they only match at zero.

What to put in “cost”

Unit product cost at minimum. Freight into the shop, packaging, and marketplace fees only if you want them inside this unit formula. Leave rent and salaries out of markup — those belong in break-even, not on one SKU’s sticker math.

Which calculator

Open the markup calculator when you have cost and want a price (both percentages show). Use margin vs markup when you only need to translate one percent into the other. Use the profit margin calculator when the conversation is already in margin language.

What this skips

Returns, shrinkage, multi-currency, and layered inventory. Not tax or accounting advice — just the arithmetic on one cost and one price.