Work out a selling price from a markup, the markup and margin behind a price you already charge, or the price that reaches a target margin. Includes a margin-to-markup table and Excel formulas.
Markup is the profit on a product expressed as a percentage of its cost: how much you add on top of what you paid. Margin is the same profit expressed as a percentage of the selling price. Because a profitable price is always higher than the cost, a product's markup is always higher than its margin.
The formula
Markup % = (Price - Cost) / Cost x 100; Margin % = (Price - Cost) / Price x 100
Both start from the same profit per unit, Price - Cost. To set a price instead, rearrange them: Price = Cost x (1 + Markup %), or Price = Cost / (1 - Margin %) for a target margin.
Worked examples
Each example uses one of the calculator's three modes. The amounts are hypothetical and in no particular currency.
Example 1
A product costs 12.00 to buy and land. You want to price it with a 75% markup on cost.
Inputs
Working
Selling price
21.00 (42.9% margin)
If the supplier's cost rises to 13.00, the same 75% markup gives a 22.75 price and the margin stays at 42.9%. A fixed markup holds the margin steady as costs move, but only if you reprice when they do.
Example 2
A product costs 18.00 and sells for 45.00. You want to know the markup and margin behind that price.
Inputs
Working
Markup and margin
150.0% markup, 60.0% margin
The 27.00 has to pay for every other cost of selling the product, from payment fees and shipping to ads and overheads, before any of it is profit you keep.
Example 3
A product costs 32.00. You want 40% of the selling price left as profit after product cost.
Inputs
Working
Selling price
53.33 (66.7% markup)
Rounding the price up to 54.00 keeps the margin just above target: 22.00 of profit, a 40.7% margin. Rounding down to 52.00 would drop it to 38.5%.
Why the difference matters
The mix-up usually happens when a price is set from a supplier's cost. You add the percentage you want to keep, and the margin that comes out is smaller than that percentage. The gap is small at low percentages and widens quickly as they rise, so a price built on a markup you mistook for a margin leaves less on every sale than you planned. The table lists the markup each margin needs, and the formula section above converts any other value.
Plan with margin. Payment fees, shipping, ad spend and refunds all grow with the price you charge, not with what the product cost you, so margin tells you directly how much of each sale is left to pay them. Markup is handy for pricing from a supplier's cost, as long as you check the margin it actually produces.
Markup only compares the price with product cost. To see what a Shopify order keeps after payment fees, shipping and ad spend, use the Shopify profit margin calculator. For gross profit across all your sales in a period, use the gross profit calculator.
| Margin | Markup needed |
|---|---|
| 10.0% | 11.1% |
| 20.0% | 25.0% |
| 25.0% | 33.3% |
| 30.0% | 42.9% |
| 40.0% | 66.7% |
| 50.0% | 100.0% |
| 60.0% | 150.0% |
| 70.0% | 233.3% |
| 75.0% | 300.0% |
| 80.0% | 400.0% |
Spreadsheets
The example sheet below has each product's cost in column A and its selling price in column B, starting on row 2. Columns C and D work out its markup and margin, and column E holds a target margin you type in yourself. Put the other formulas in free columns to the right, so no formula writes into a cell another one reads, then fill them down for every product. They work the same way in Google Sheets.
| A | B | C | D | E | |
|---|---|---|---|---|---|
| 1 | Cost | Selling price | Markup % | Margin % | Target margin |
| 2 | 25.00 | 40.00 | 60.0% | 37.5% | 40.0% |
| What it works out | Formula | Result in the example |
|---|---|---|
| Markup %Goes in C2. Format the cell as a percentage. | =(B2-A2)/A2 | 60.0% |
| Margin %Goes in D2. Format the cell as a percentage. | =(B2-A2)/B2 | 37.5% |
| Price from cost and markupPut it in a free column such as F2, not in B2. It turns the markup in C2 (here 60.0%) back into a price; point it at a cell with the markup you want to price from instead. | =A2*(1+C2) | 40.00 |
| Price from cost and target marginPut it in a free column such as G2. It prices from the target margin you typed in E2 (here 40.0%). | =A2/(1-E2) | 41.67 |
| Markup needed for a marginTurns the target margin in E2 (here 40.0%) into the markup that produces it. | =E2/(1-E2) | 66.7% |
| Margin from a markupTurns the markup in C2 (here 60.0%) into the margin it gives. | =C2/(1+C2) | 37.5% |
In MerchantFlow
MerchantFlow connects to your Shopify or WooCommerce store, uses the product costs you sync or enter, and shows margin and profit for each product and order after payment fees, shipping and ad spend, not just after cost of goods.
See how product cost tracking worksCommon Questions
There is no markup that is right for every business, and a figure borrowed from another store or category can mislead you. Work it out from your own costs: the margin a price leaves has to pay for payment fees, shipping, ad spend, returns and overheads, and still leave profit. Decide the margin you need, then use the target margin mode to find the price and the markup that produce it.
A 100% markup, which means doubling the cost: a product that costs 15 sells for 30, and the 15 of profit is half the price. Retailers sometimes call this keystone pricing. The table above lists the markup for other margins; a 30% margin, for example, needs a 42.9% markup.
Everything you pay to get one unit ready to sell: the supplier price plus freight, import duty, and any packaging or labor you pay per unit. That is the landed cost. Leave out costs that come per order or per month, such as payment fees, shipping to the customer, ads and rent, and check those against the margin instead. The COGS calculator helps you add up a landed unit cost.
The product sells for less than it costs, so every sale loses money: selling a product that costs 20 for 15 is a -25% markup and a -33.3% margin. That can be a deliberate choice for clearance stock, but it should be one you make on purpose. Enter the price in the markup from price mode to see the loss per unit.
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