What markup means
Markup is profit expressed as a percentage of cost: a 60% markup on a 25.00 cost adds 15.00 for a 40.00 price. It is the natural way to think when you buy at one price and sell at another, which is why trade pricing still runs on it.
The conversion that saves arguments
Markup 100% = margin 50%. Markup 50% = margin 33%. Markup 33% = margin 25%. The gap widens as markup rises, and it is the reason a supplier's 'keystone' 100% markup produces only a 50% margin — before any fees.
When to use which
- Markup for quoting trade or wholesale prices from cost
- Margin for retail pricing, investor decks and category benchmarks
- Never mix them in one spreadsheet without labelling
- Always layer marketplace fees on top of whichever you choose
A worked caution
Cost 25, 60% markup, price 40. A marketplace takes 15% (6.00) and fulfilment takes 4.50. Profit falls to 4.50 — an 11% margin, not the 37.5% the markup implied. Markup prices the product; fees decide whether it works.
Frequently Asked Questions
Is 100% markup double the price?
Yes — and that equals a 50% margin, not 100%.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). 60% markup → 37.5% margin.
Should service businesses use markup?
They usually price by hourly rate and utilisation instead; markup applies to resale of goods or materials.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
BizCalcTool runs entirely in your browser. The figures you enter are never uploaded, stored or shared — there is no backend to send them to.