Markup calculator
Markup is how much you add to cost to set price, as a percentage of cost. It is not the same as margin (a share of price), and confusing the two quietly wrecks pricing. Solve it any way, then see the gross margin it implies and the break-even ROAS that margin sets.
Using typical funnel assumptions, to show that the metric above can’t tell you if you’re winning. Your real numbers live in the full calculator.
Drop in one product and the Target ROAS calculator works your whole P&L backwards to the number that actually decides it, free, no signup.
What is markup?
Markup is how much you add to a product's cost to set its price, expressed as a percentage of the cost. If a product costs you $40 and you sell it for $100, you have added $60, which is a 150% markup. It answers a pricing question: given my cost, what do I charge?
Markup is the single most confused number in pricing because it is constantly mistaken for margin. They measure the same gap between cost and price, but against different bases: markup is the gap over cost, margin is the gap over price. Mixing them up silently underprices products.
How to calculate markup
Markup vs margin (the costly mix-up)
Because markup is measured over cost and margin over price, the same product always shows a higher markup than margin. Pricing to a margin target using a markup number leaves money on the table. This is the conversion:
| Markup | Equivalent margin |
|---|---|
| 25% | 20% |
| 50% | 33% |
| 100% | 50% |
| 150% | 60% |
| 200% | 67% |
| 300% | 75% |
A 50% markup is only a 33% margin, not 50%. If you want a 50% margin you need a 100% markup. Always convert before you price. Then check the real margin with the profit margin calculator, which uses your full cost stack.
How to set markup that actually holds
- Price to a target margin, then convert it to the markup. Decide you need 60% margin, then apply the matching 150% markup, not a round 60%.
- Mark up on landed cost, not invoice cost. Include freight, duties and inbound handling, or your real margin lands well below plan.
- Vary markup by role. Hero products can carry a thinner markup to win the sale; accessories and bundles can carry more.
- Re-check markup whenever costs move. A supplier price rise quietly compresses margin if your price does not follow.
The operator’s playbook
How a paid-media operator reads this number, not a glossary definition.
Markup is not margin (the costly mix-up)+
Markup is profit as a share of cost; margin is profit as a share of price. A 100% markup is only a 50% margin. A 50% markup is a 33% margin. If you price off markup but plan ads off margin, your break-even ROAS is wrong and you scale into a loss.
What markup leaves out+
Markup on product cost ignores shipping, payment fees, returns and discounts. The margin that actually sets your ad budget is what survives all of those. Price for the real margin, not the sticker one.
Frequently asked questions
How do you calculate markup?
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Markup % = (price - cost) / cost x 100. A $30 item sold at $75 is a 150% markup. This tool also solves the other way: enter cost and a markup % to get the price.
What is the difference between markup and margin?
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Markup is profit over cost; margin is profit over price. They are easy to confuse: a 150% markup is a 60% margin. Your break-even ROAS is built on margin, so always convert before you plan spend.
What markup should I use?
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Enough that the resulting margin, after shipping, fees, returns and discounts, leaves room for your ad budget and profit. There is no universal number; price back from the margin your category and ad costs demand.
What is a 50% markup?
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A 50% markup adds half the cost on top: a $40 item sells for $60. Note that is only a 33% margin, not 50%, because margin is measured against price.
How do you find price from markup?
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Multiply the cost by 1 plus the markup. A $40 cost at a 150% markup is $40 x 2.5 = $100.
What is keystone markup?
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Keystone is the retail habit of doubling cost, a 100% markup, which works out to a 50% margin. It is a starting point, not a rule; thin-margin categories often need more.
Built by Yehonatan Tav, paid media for ecommerce brands spending $50k to $500k a month. Figures are illustrative; run the logic on your own numbers.