Calculate selling price from cost and markup %, and see the equivalent gross margin. Works backward too.
| Input | Result |
|---|---|
| Cost $40, markup 60% | Price $64.00 · margin 37.5% |
| Cost $10, markup 100% | Price $20.00 · margin 50.0% |
| Cost $80, markup 25% | Price $100.00 · margin 20.0% |
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A 60% markup equals a 37.5% margin, mixing the two up is the most common pricing mistake in small business.
Margin = Markup / (1 + Markup). So 100% markup = 50% margin, 50% markup = 33.3% margin, 25% markup = 20% margin.
It depends on your industry and overheads, retail commonly ranges from 20% to 100%+ on cost. Work backward from the profit you need after expenses, not from a rule of thumb.
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