What markup means
Markup is the amount you add on top of cost, expressed as a percentage of that cost. Buy for 40 and sell for 100 and you've added 60, which is a 150% markup. Retailers usually think in markup because they start from a known cost and mark it up to set a price.
Markup vs margin
- Markup divides profit by cost — "how much did I add on?" It can go well above 100%.
- Margin divides profit by selling price — "what share of the sale is profit?" It caps below 100%.
- To convert: a 150% markup equals a 60% margin; a 100% markup equals a 50% margin.
Frequently asked questions
How do I set a price from a target markup?
Multiply the cost by one plus the markup. A 50% markup on a cost of 40 gives a price of 40 × 1.5 = 60.
Why is markup bigger than margin?
Because markup is measured against the smaller number (cost) while margin is measured against the larger number (price). Same profit, bigger denominator gives a smaller percentage.
What does a negative markup mean?
You're selling below cost — a loss. The calculator flags this in red.