How to Use the Retail Markup
Markup and margin are calculated from the same numbers but express profit differently — markup is profit as a percentage of cost, margin is profit as a percentage of price — and mixing them up leads to real pricing mistakes. This calculator converts your target markup into a selling price and shows both numbers side by side.
Step-by-Step Guide
- 1
Enter your cost price per unit (wholesale or landed cost).
- 2
Enter your target markup % — 100% is the classic 'keystone' retail markup, doubling cost.
- 3
Add sales tax % if you want the tax-inclusive shelf price.
- 4
Enter units sold per month to project total gross profit.
- 5
Review selling price, gross profit per unit, and both margin % and markup %.
Retail Markup Formula
Selling Price = Cost Price × (1 + Markup %) Gross Profit = Selling Price − Cost Price Margin % = (Gross Profit ÷ Selling Price) × 100 Markup % = (Gross Profit ÷ Cost Price) × 100
Worked Example
Cost: $12. Markup: 100% (keystone). Units sold: 200/mo. Selling Price = $12 × (1 + 100%) = $24 Gross Profit per Unit = $24 − $12 = $12 Margin % = $12 ÷ $24 = 50% Markup % = $12 ÷ $12 = 100% Monthly Gross Profit = $12 × 200 = $2,400
Understanding your result
Calculator results depend entirely on the information entered. For the most useful estimate, use current and accurate figures and include all costs that apply to your specific situation.
Frequently Asked Questions
What's the difference between markup and margin?
Markup is profit expressed as a percentage of cost: (Profit ÷ Cost) × 100. Margin is profit expressed as a percentage of selling price: (Profit ÷ Price) × 100. A 100% markup always equals exactly a 50% margin — they describe the same profit differently.
What is keystone pricing?
Keystone pricing means doubling your cost to set the retail price — a 100% markup, or 50% margin. It's a simple, widely used starting point in retail, though not always optimal for every category or price point.
Should every product have the same markup?
No — retailers commonly vary markup by category based on price sensitivity, competition, and perceived value. Staples might carry a lower markup to stay competitive, while unique or high-demand items can support a much higher markup.
How do I convert a target margin % into a markup %?
Markup % = Margin % ÷ (1 − Margin %). For example, a 40% target margin requires a markup of 40% ÷ 60% ≈ 66.7%.
Does markup account for other selling costs?
Not directly — this calculator computes gross profit only. Shipping, payment processing, platform fees, and returns should be subtracted separately to find your true net profit margin, similar to the Shopify or profit margin calculators.