Pricing decisions decide business viability. This calculator turns cost and markup into a selling price, a per-unit profit, and — crucially — the profit margin, which is what most financial statements actually report.
The Formulas
Markup measures profit against the cost; margin measures it against the selling price. The two produce different numbers and drive different intuitions.
Worked Example
A product costs $20 and you apply a 50% markup: selling price is $30, profit per unit is $10, and margin is 33.3%. Double the markup to 100% (“keystone” pricing) and you get $40 price, $20 profit, and a 50% margin.
Why Both Numbers Matter
Founders often quote markup because it is easy to compute from cost. Accountants and investors think in margin because it is what shows up on the income statement and enables clean comparison across products with different cost structures. Know both for the same product.
Frequently Asked Questions
What is the difference between markup and margin?
Markup expresses profit as a percentage of cost; margin as a percentage of selling price. A 50% markup produces a 33% margin.
How do retailers typically price?
Traditional retail uses keystone pricing (100% markup). Groceries run much thinner, luxury goods much wider — category and competition rule.
Should shipping and fees count as cost?
Yes — include every variable cost per unit for realistic pricing: product, packaging, inbound shipping, payment processing.