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Gross margin & markup
calculator.
Enter any two of cost, price, margin or markup and get the rest. Price a whole range at a target margin, see your blended margin and check how you compare with keystone.
Gross margin and markup calculator
Gross margin
58.3%
$17.50 gross profit per unit: 58.3% margin, 140.0% markup.
- Cost
- $12.50
- Price
- $30.00
- Gross margin
- 58.3%
- Markup
- 140.0%
Keystone check
Keystone pricing doubles the cost: $12.50 × 2 = $25.00, a 50% margin and 100% markup. You’re $5.00 above keystone.
Show your work
Gross margin = (price − cost) ÷ price($30.00 − $12.50) ÷ $30.00 = 58.33%Markup = (price − cost) ÷ cost($30.00 − $12.50) ÷ $12.50 = 140.00%Price from margin = cost ÷ (1 − margin)Price from markup = cost × (1 + markup)Markup = margin ÷ (1 − margin); margin = markup ÷ (1 + markup)0.5833 ÷ 0.4167 = 1.4000
Price a whole range
Edit any row. Quantity is optional and only weights the blended margin.
| Item | Cost ($) | Price ($) | Qty | Margin | Markup | Price at 55% | Remove |
|---|---|---|---|---|---|---|---|
| 63.6% | 175% | $17.78 | |||||
| 60.7% | 155% | $12.22 | |||||
| 60.0% | 150% | $13.33 | |||||
| 64.4% | 181% | $7.11 | |||||
| Blended | $1,116 | $2,965 | 62.4% | 166% |
Blended margin 62.4% on $2,965 of sales ($1,849 gross profit; cost and price totals above are × quantity). Every item meets your 55% target.
Margin to markup conversion
| Gross margin | Markup needed | Price for a $10 cost |
|---|---|---|
| 20% | 25.0% | $12.50 |
| 25% | 33.3% | $13.33 |
| 30% | 42.9% | $14.29 |
| 33.3% | 50.0% | $15.00 |
| 40% | 66.7% | $16.67 |
| 45% | 81.8% | $18.18 |
| 50% (keystone) | 100.0% | $20.00 |
| 55% | 122.2% | $22.22 |
| 60% | 150.0% | $25.00 |
| 65% | 185.7% | $28.57 |
| 70% | 233.3% | $33.33 |
Worked example.
A candle costs $12.50 landed and sells for $30.00.
- Gross profit: $30.00 − $12.50 = $17.50.
- Margin: $17.50 ÷ $30.00 = 58.3%. Markup: $17.50 ÷ $12.50 = 140%.
- Keystone would be $12.50 × 2 = $25.00, so this price is $5.00 above keystone.
- To hit a 55% margin instead: $12.50 ÷ (1 − 0.55) = $27.78.
In the range table, the four example items blend to a 62.4% margin on $2,965 of sales. The mug ($5.50 cost, $14.00 price) sits at 60.7%, comfortably above a 55% target; no items fall below it.
Margin vs markup, and why it matters.
Both measure the same dollars of profit, divided by different things. Margin divides by the selling price; markup divides by the cost. So markup is always the bigger number: a 50% margin is a 100% markup.
The classic mistake is adding a “50% markup” when you meant a 50% margin. On a $10 cost that prices the item at $15 (a 33% margin) instead of $20, and your break-even maths, which uses margin, quietly stops working.
- Use margin for planning: break-even, profit targets, comparing categories.
- Use markup at the shelf: it’s a quick multiplier on the invoice cost.
- Keystone (price = 2 × cost) is a common starting point in gift, apparel and specialty retail, not a rule. Markdowns, shrink and card fees all come out of the initial margin, so the margin you realise is lower than the one on the ticket.
Questions retailers ask.
What is the difference between margin and markup?
Both start from gross profit (price minus cost). Margin divides it by the price; markup divides it by the cost. A $10 item sold for $20 has a 50% margin and a 100% markup.
How do I price for a target margin?
Divide the cost by one minus the margin. For a 60% margin on a $12 cost: $12 ÷ 0.40 = $30. Multiplying the cost by 1.6 instead gives a 60% markup, which is only a 37.5% margin.
What is keystone pricing?
Setting the retail price at double the wholesale cost: a 100% markup and a 50% gross margin. It’s a common starting point in specialty retail before markdowns and shrink.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 100% markup is 1 ÷ 2 = 50% margin; a 60% markup is 0.6 ÷ 1.6 = 37.5%.
What is a blended margin?
The margin across several items weighted by what you actually sell: total sales minus total cost, divided by total sales. A few high-volume, low-margin items can pull it well below the average of the item margins.
Margin is half the story. Traffic is the other half.
Dor counts the people who walk in and pairs them with your POS, so you can see whether pricing changes cost you buyers.
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