Formula and method
Price = cost × (1 + markup); price = cost ÷ (1 − margin); markup = (price − cost) ÷ cost; margin = (price − cost) ÷ price; margin = markup ÷ (1 + markup); markup = margin ÷ (1 − margin); multiplier = price ÷ cost; largest discount without a loss = margin; price incl. tax = price × (1 + tax rate). Markup chain: final price = cost × Π(1 + mᵢ).
Worked example
Cost 50 with a 40% markup: price = 50 × 1.4 = 70, profit 20, margin = 20 ÷ 70 = 28.57%, multiplier 1.4. For a 40% margin the price must be 50 ÷ 0.6 = 83.33 (a 66.67% markup).
Assumptions and limits
- Cost should be the landed cost (purchase price, freight, duty). Fixed overheads are not allocated here; use the break-even calculator for that.
- Tax is added on top of the price and excluded from profit. Where shelf prices include VAT (e.g. EU retail), divide by (1 + rate) before entering the price.
- Currency-neutral: use the same currency for every amount.
Frequently asked questions
What is the difference between markup and margin?
Both use profit on top; markup divides by cost and margin by price. Cost 100, price 150: markup 50%, margin 33.3%.
What margin is a 50% markup?
Margin = 50 ÷ 150 = 33.33%. Common pairs: 25% → 20%, 100% → 50%, 200% → 66.67%.
How do I find the cost from a selling price?
Cost = price ÷ (1 + markup) or cost = price × (1 − margin). Choose the “Price + markup” or “Price + margin” mode.
What is keystone pricing?
Retailers double the wholesale cost: a 100% markup, a 50% margin and a 2× multiplier.