Set profitable prices by calculating markups and margins accurately
💡 Pro Tip: A 25% markup equals a 20% profit margin.
To run a successful business, you must ensure your selling price covers your costs and provides a healthy profit. Markup is the simplest way to determine your retail price based on your wholesale costs.
This calculator uses the following business formulas:
Scenario: You buy a product for ₹500 and want a 50% markup.
1. Calculate Profit: ₹500 × 0.50 = ₹250
2. Calculate Selling Price: ₹500 + ₹250 = ₹750
3. Calculate Margin: (₹250 / ₹750) = 33.33%
Markup is the percentage added to the COST to determine the selling price. Margin is the percentage of the SELLING PRICE that is profit. While related, they are not the same. For instance, a 50% markup always results in a 33.33% gross margin.
The formula is: Selling Price = Cost + (Cost × Markup Percentage). If your product costs ₹100 and you want a 40% markup, you sell it for ₹140.
Standard retail markup is often 50% (known as Keystone Pricing), but this varies by industry. Luxury goods may have markups of 100% or more, while high-volume groceries may operate on 10-15%.
Retailers typically use markup to set prices because it is easier to calculate based on inventory cost. However, accountants use margin to report profitability. This calculator provides both figures instantly.