Margin vs Markup Calculator
| Cost $100, markup | Price | Profit $ | Margin |
|---|---|---|---|
| 25% | $125 | $25 | 20.0% |
| 50% | $150 | $50 | 33.3% |
| 75% | $175 | $75 | 42.9% |
| 100% (keystone) | $200 | $100 | 50.0% |
Margin and markup measure the same profit with different denominators, and mixing them up is the classic small-business pricing error. Markup runs on cost: a 50% markup on a $100 item is a $150 price. Margin runs on price: that same $150 sale carries a 33.3% margin ($50 profit over $150 revenue). Enter cost and any one target - price, margin or markup - and the calculator returns the whole triangle, so a supplier quote becomes a price list without a spreadsheet.
The failure mode is real: a retailer who 'needs 50% margin' but prices by adding 50% markup is pricing 16.7% too low on every unit - $125 instead of $150 on the $100 cost - and the gap widens as margins rise. Industry shorthand varies too: keystone (doubling cost) is a 100% markup but a 50% margin, and grocery runs thin margins on high markup-speed while jewelry runs fat margins on slow turns. The table below is the conversion ladder.
How to use
- Enter the unit cost and ONE target: your desired price, your margin goal, or your markup rule.
- Read the full triangle: price, profit dollars, margin and markup for the same item - all three views agree by construction.
- Price a catalog: the table's markup-to-margin conversions cover the standard rules without a calculator per line.
Frequently asked questions
What is the difference between margin and markup?
The denominator. Margin is profit divided by PRICE ($50 profit on a $150 sale = 33.3% margin); markup is profit divided by COST ($50 profit on $100 cost = 50% markup). Same item, same dollars, different fractions - which is why a 50% markup and a 50% margin are very different prices: the first is $150, the second requires $200.
What margin is a 50% markup?
33.3%. Price = $100 + 50% = $150, profit = $50, and margin = $50 / $150 = 33.3%. The conversion is never linear: margin = markup / (1 + markup). At small markups the two are close (10% markup is a 9.1% margin), but they diverge fast - a 100% markup is only a 50% margin.
Which should I use for pricing?
Markup for building a price from cost (suppliers quote costs; markup rules are fast); margin for judging results (financial statements report margin, and rent plus payroll come out of margin dollars). The practical workflow: price with markup, then verify the resulting margin covers overhead - if your operating costs run 30% of revenue, a 33% margin leaves almost nothing on the table.
What is keystone pricing?
Doubling the cost - a 100% markup, which is a 50% margin. It is the traditional retail rule of thumb for giftware and apparel, inherited from an era of slower turns and fatter overheads. Discounters deliberately break keystone and run 30-40% markups at volume; luxury runs multiples of keystone because the margin IS the product's scarcity signal.