How it’s calculated
- Selling Price
- equals Cost × (1 + Markup ÷ 100)
- Profit
- equals Selling Price − Cost
- Margin
- equals (Profit ÷ Selling Price) × 100
Worked example
A furniture retailer buys a side table wholesale for $120 and applies its standard 75% markup.
- Selling price = $120 × 1.75 = $210.00
- Profit = $210 − $120 = $90.00
- Margin = $90 ÷ $210 × 100 = 42.86%
A 75% markup produces a margin of about 43% — a useful reminder that the two percentages are not interchangeable.
Markup needed for a target margin
If you think in margins but price using markup, this table converts between them using Markup = Margin ÷ (1 − Margin).
| Target margin | Required markup |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
| 75% | 300% |
To check the margin on an existing price, use the Profit Margin Calculator.
Assumptions and limitations
- Cost should be your full landed cost per unit: purchase price plus freight, duties and packaging.
- Markup is applied to cost only. Discounts, payment processing fees and sales tax are not included.
- Negative markups (selling below cost) are allowed down to −100%, which corresponds to a price of $0.
Results are estimates for information only and are not financial, tax or legal advice. See our disclaimer.