What is the Markup?
Markup is profit expressed as a percentage of cost. Margin is profit as a percentage of selling price. They are never equal, and mixing them up is one of the most common and expensive errors in small business pricing.
A 50% markup produces only a 33.3% margin. A 100% markup gives a 50% margin.
Formula & worked example
Margin = (Selling price − Cost) / Selling price × 100
Markup = Margin / (1 − Margin)
Worked example: a ₹600 cost with 50% markup sells at ₹900, giving ₹300 profit. That is a 50% markup but only a 33.3% margin. Adding 18% GST brings the customer-facing price to ₹1,062.
How to use this markup calculator
- Enter your cost price including freight and duties.
- Enter the markup you want to apply on cost.
- Add GST if you must show a tax-inclusive price.
- Check the resulting margin — it is always lower than the markup.
Smart tips
- To achieve a 40% margin you need a 66.7% markup. Setting markup equal to your target margin quietly underprices you.
- Include all landed costs — freight, duty, packaging — in cost price before applying markup.
- Retail commonly uses keystone pricing: a 100% markup, giving a 50% margin.
- Check that your markup still leaves a healthy margin after discounts and returns.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. A 50% markup equals a 33.3% margin.
How do I convert margin to markup?
Markup = margin / (1 − margin). For a 40% margin: 0.4 / 0.6 = 66.7% markup.
What markup should I use?
Retail typically uses 50–100%, wholesale 20–40%, and restaurants 200–300% on food cost. It depends on your overheads and competition.
Is GST calculated on the marked-up price?
Yes, GST applies to the selling price after markup, which is why the final customer price is higher than the marked-up figure.
Want the theory behind the numbers? Read our business guides on the Money Blog.