Markup vs Margin Calculator
Convert between markup (% of cost) and margin (% of price), and compute selling price from either. Fixes the single most common small-business pricing mistake.
The tool converts to the other metric automatically.
Markup divides profit by cost. Margin divides profit by selling price. Same profit, different denominators. A 50% markup is a 33.3% margin; a 100% markup (keystone pricing) is a 50% margin.
About this tool
Markup and margin are the same dollar of profit expressed two different ways, and confusing them is the most common small-business pricing mistake. Apply a 40% markup when you meant 40% margin and you undercharge by about 17%, which often turns the intended profit into break-even or a loss. This calculator converts cleanly between the two and computes a selling price from either input.
Markup is profit as a percentage of cost. It is the number retailers and distributors typically use when pricing goods cost-plus: "mark it up 100%" means price at twice cost. Margin is profit as a percentage of selling price. It is the number financial statements use and the number financial reports quote. A 50% markup is a 33% margin. A 100% markup (keystone) is a 50% margin. A 400% markup is an 80% margin.
Enter cost and pick which percentage you know (markup or margin). The tool returns selling price, profit per unit, and both the markup and the margin so you can see the conversion. Use this to verify that a pricing formula described one way yields the margin you actually need, or to convert an industry standard markup into the margin you should expect on your income statement. See the profit margin calculator for the full income-statement treatment of the same underlying math.
How it works
From markup: selling_price = cost × (1 + markup_pct / 100). From margin: selling_price = cost / (1 - margin_pct / 100). Once selling price is known, markup = (price - cost) / cost × 100 and margin = (price - cost) / price × 100.
The two metrics diverge because the denominator changes. Markup divides profit by cost. Margin divides the same profit by a larger number (selling price = cost + profit). Higher markups produce higher margins, but the relationship is nonlinear: a 10% markup is a 9.1% margin, a 50% markup is a 33.3% margin, a 100% markup (keystone) is a 50% margin, and a 900% markup is a 90% margin. Industries that quote keystone pricing (doubling cost) are selling at 50% margin.
The tool clamps margin inputs to 99.99% to avoid divide-by-zero from a 100% margin, which would imply an infinite selling price.
Examples
Classic 50% markup on a $100 cost turns into a 33.3% margin at a $150 selling price. Same $50 profit, two different ratio expressions. This is the most common point of confusion when someone on the business side asks for a 50% margin and the pricing formula uses 50% markup instead.
40% margin on $100 cost requires a $166.67 selling price, which is a 66.7% markup. If you intended 40% margin and accidentally applied a 40% markup, you would price at $140, yielding only 28.6% margin, an 11-point shortfall that wipes out planned profit.
200% markup triples the cost: cost plus 2× cost equals 3× cost. Margin ends up at 66.7%. Strong markups like this are typical in jewelry retail and specialty goods where raw-material cost is a small fraction of perceived value.
When to use
Use this whenever you are setting a price from a cost basis, converting an industry markup convention to a target margin, or verifying that a pricing formula yields the margin your business plan assumes. Pair with the profit margin calculator for the income-statement view and the break-even analysis tool to confirm that the chosen margin covers fixed costs at realistic volume.
Related concepts
Frequently asked questions
Which should I use, markup or margin?
Margin for financial reporting and target setting. Markup for operational pricing formulas when working from a cost basis. Financial statements always quote margin. Retail pricing software and distributor agreements often quote markup. Convert between the two whenever you cross contexts.
Is keystone pricing still standard?
Keystone (100% markup, 50% margin) is the traditional retail convention but has been eroded by online price competition. Many categories now run well below keystone. Specialty and luxury goods often price above keystone at 3-10× cost.
Can margin ever exceed 100%?
No. Margin is profit divided by selling price, and profit cannot exceed selling price. The theoretical maximum margin is 100%, reached only when cost is zero. Markup can exceed 100% freely (e.g. 400% markup, 80% margin).
Sources
- SBA Small Business Administration, Price your product or service
(primary, accessed Apr 16, 2026)
Federal small-business agency guidance on pricing; the markup-vs-margin distinction is standard across managerial accounting references.
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