Markup vs Margin Calculator
Convert markup % ↔ margin % instantly. Given any two of cost, price, markup, margin — get the other two. The retailer math everyone confuses. Free.
Markup vs Margin Calculator
Markup and margin are the two pricing concepts most retailers, e-commerce founders, and consultants confuse. They share a numerator (profit) but use different denominators: markup uses cost; margin uses price. Pick an input mode below and the tool fills in the rest.
| Markup % | Margin % | Multiplier (Price ÷ Cost) |
|---|---|---|
| 25% | 20.00% | 1.25× |
| 50% | 33.33% | 1.50× |
| 67% | 40.12% | 1.67× |
| 100% | 50.00% | 2.00× |
| 150% | 60.00% | 2.50× |
| 200% | 66.67% | 3.00× |
| 400% | 80.00% | 5.00× |
| 900% | 90.00% | 10.00× |
How to Use the Markup / Margin Calculator
Pick your input mode
If you know cost + selling price, use mode 1. If you set prices by marking up cost, use mode 2. If you target a gross margin %, use mode 3 (most common for retailers). If you start from competitor price and reverse-engineer cost, use mode 4.
Enter values in USD
Cost is the landed cost of one unit: what you paid for it plus inbound freight, duties and anything else needed to get it ready to sell. Leave out selling costs such as shipping to the customer, payment fees and marketing; those come off later and reduce operating margin, not gross margin.
Read both percentages
The tool shows margin (green) and markup (yellow) side-by-side so you can never confuse them. A 100% markup is a 50% margin. A 200% markup is a 67% margin. The ref table at the bottom is the conversion cheat sheet.
Compare to industry benchmarks
For a reference point, Aswath Damodaran of NYU Stern publishes gross margins by industry for US listed companies. In his January 2026 data: apparel 56.9%, restaurants 32.2%, general retail 33.2%, specialty retail 35.3%, food wholesalers 15.4% and application software 71.7%. Your own product can sit far from its industry average, so use these as a sanity check only.
Markup vs Margin — The Most Confused Pair in Pricing
Same profit, two percentages
Markup and margin both start from gross profit per unit, price minus cost, but divide it by different things. Markup divides by cost; margin divides by price. A product bought for $20 and sold for $50 makes $30: a markup of 150% and a margin of 60%. Because price is larger than cost whenever there is a profit, margin is always the smaller number.
Converting between them: margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin). So a 25% markup is a 20% margin, 50% is 33.3%, 100% is 50% and 200% is 66.7%. The relationship is not linear, which is where pricing mistakes come from.
To reach a target margin, divide the cost by one minus the margin. Adding the same percentage to cost always falls short.
The commonest mistake
Someone aiming for a 50% margin adds 50% to cost and ends up at 33.3%, almost 17 percentage points short. To hit a margin target, divide cost by one minus the margin: $20 ÷ (1 − 0.5) = $40. This calculator's "cost + margin" mode does that for you.
Gross margin is not the bottom line
The margin here is gross margin: price minus the cost of the goods. Shipping to the customer, payment fees, marketplace commissions, returns, marketing, rent and salaries all come out of it afterwards. Damodaran's figures show how much: across all US listed companies in January 2026 the average gross margin was 37.8% but the average net margin 9.7%. Price with the whole chain in mind.
Industry reference points
Aswath Damodaran's margins by industry (NYU Stern, January 2026) gives gross margins for US listed companies by industry. Some examples: apparel 56.9%, restaurants and dining 32.2%, general retail 33.2%, specialty retail 35.3%, grocery and food retail 26.3%, food wholesalers 15.4%, building materials 30.9%, general electronics 26.8%, pharmaceuticals 71.7% and system and application software 71.7%. These are averages for large public firms; a small business can sit well above or below them.
Markup against margin, the conversion, and gross margins by industry
Markup = (price − cost) ÷ cost; margin = (price − cost) ÷ price.
A 50% markup is a 33.3% margin; a 100% markup is 50%; a 200% markup is 66.7%.
To set a price for a target margin, divide cost by (1 − margin): $20 at 50% margin is $40.
Doubling cost, a 100% markup, gives a 50% margin.
US apparel companies averaged a 56.9% gross margin in Damodaran's January 2026 data.
US restaurants averaged 32.2%, general retailers 33.2% and food wholesalers 15.4%.
System and application software averaged 71.7% gross margin.
Across all US listed firms, gross margin averaged 37.8% against a net margin of 9.7%.
Margin is bounded at 100%; markup has no upper limit, which makes margin easier to compare.
Gross margin excludes shipping out, payment fees, marketing and overheads; net margin includes them.
Frequently Asked Questions
- They share a numerator (price minus cost = profit) but use different denominators. Markup = profit ÷ cost (asks "how much above cost did I add?"). Margin = profit ÷ price (asks "what % of revenue is profit?"). Margin is always smaller than markup. A USD 20 → USD 50 product has 150% markup but only 60% margin.
- Margin = Markup ÷ (1 + Markup). Examples: 50% markup ÷ 1.5 = 33% margin. 100% markup ÷ 2.0 = 50% margin. 200% markup ÷ 3.0 = 67% margin. Reverse: Markup = Margin ÷ (1 − Margin). 50% margin ÷ 0.5 = 100% markup. The conversion is non-linear — doubling one does not double the other.
- Use whichever your readers expect, and always say which it is. Margin is easier to compare and to add up across products, because it never exceeds 100% and total gross profit divided by total revenue gives an overall margin. Markup is natural when prices are set by adding a percentage to cost. Confusion between the two causes more pricing errors than either one alone.
- Keystone pricing means setting the retail price at double the wholesale cost: a 100% markup, which is a 50% margin. It is a traditional retail rule of thumb rather than a standard; whether it works depends on your other costs and what customers will pay.
- You probably marked up cost by 50%, which gives you 33% margin — not 50% margin. To hit a 50% margin you must mark up 100% (i.e. double the cost). This confusion is the single most-common pricing error in small business. Use this tool's "Cost + Margin %" input mode and let it compute the correct selling price.
- It varies widely. Aswath Damodaran of NYU Stern publishes averages for US listed companies; in his January 2026 data apparel was 56.9%, restaurants and dining 32.2%, general retail 33.2%, specialty retail 35.3%, grocery and food retail 26.3%, food wholesalers 15.4%, building materials 30.9% and system and application software 71.7%. Across all firms the average gross margin was 37.8% and the average net margin 9.7%. Use these as reference points, not targets.
- No. It calculates gross margin from cost and price. Marketplace commissions, payment fees and fulfilment charges reduce what you keep, so either add them to cost per unit or subtract them from the price before entering, and check the platform's current fee schedule.
- If a wholesaler sells to a retailer at 40% below the suggested retail price, a $100 item wholesales at $60 and the retailer's margin at full price is 40%. If the retailer then discounts to $90, the margin falls to $30 ÷ $90 = 33.3%. Use the "price + margin" mode to work backwards from a retail price and a margin to the cost.
- Yes — landed cost. "Cost" for gross margin should include manufacturing, materials, inbound freight, import duties, customs broker fees — everything to land the unit in your warehouse. Exclude outbound shipping to customer (deduct from price as a discount or fee instead), marketing, salaries, software. The cleanest distinction: COGS includes everything that scales with unit volume; operating expenses are everything else.
- Work backwards from the importer's price and margin. Take the expected US retail price, apply the retailer's and importer's margins in turn with the "price + margin" mode, then subtract freight, duty and insurance to reach the factory price you can quote. Freight and duty depend on the product and route, so use current quotes and the US tariff schedule rather than averages.
Method & sources
How it computes
Markup = (price - cost) / cost and margin = (price - cost) / price, converted as margin = markup / (1 + markup) and markup = margin / (1 - margin), in four input modes (cost+price, cost+markup, cost+margin, price+margin). Arithmetic only.
What this tool implements
- Industry gross margins now come from Damodaran's January 2026 US dataset (apparel 56.9%, restaurants 32.2%, general retail 33.2%, food wholesalers 15.4%, application software 71.7%; all firms 37.8% gross, 9.7% net).
- The page said restaurants run a '60-70% food margin' and attributed a set of industry margins to 'Damodaran's NYU dataset (2024)' that do not match his data (restaurants 32.2% gross in January 2026). Removed: Amazon FBA fee ranges, 'keystone' history and ASEAN freight and duty figures.
Sources
- Damodaran A. Margins by sector (US), data as of January 2026. NYU Stern. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/marg…
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