Key Takeaways:
- Retail markup is your profit on an item (Selling Price – Cost) shown as a percentage of what the item cost you.
- Markup and margin describe the same profit from two different angles. A 100% markup always equals a 50% margin, and mixing up the two leads to underpricing.
- Adding the same markup to everything you buy, called cost-plus pricing, is fast and predictable, but it leaves money on the table for products people would pay more for.
- The right markup depends on what you sell. Grocery items may carry markups of under 30%, while jewelry and accessories often carry markups of over 200%.
Markup is the percentage you add on top of what a product costs you to get its selling price, and the formula is simple: (Selling Price – Cost) ÷ Cost × 100. If a product costs you $20 and you sell it for $50, your markup is 150%. Markup is the number you use to determine what to charge, making it the starting point for every pricing decision in your store.
Use the free calculator below to find the markup on any product, or enter your cost and the markup you want to get the exact price you should charge. Then keep reading for a plain breakdown of the formula, a chart that turns markup into margin, and typical markup ranges for different types of stores.
Free Retail Markup Calculator
Calculate Your Retail Markup
Markup shows how much you add on top of cost to reach your selling price.
Your Markup
Enter what a product costs you and what you sell it for, and the calculator shows your markup along with your profit in dollars and your margin. Or switch to the second mode and work the other way: enter your cost and the markup you want, and the calculator tells you the price to put on the tag.
What Retail Markup Measures
Retail markup is the amount you charge above what it costs you. It answers the question you face every time a new box arrives at the store: I paid this much for the item, so what should I charge for it?
Starting from cost is what makes markup different from margin, which measures your profit relative to the selling price. Markup is the tool you price with, and margin is the report card you check afterward. You set prices with a markup, then judge how the store is doing based on margins.
The Retail Markup Formula
The markup formula is Markup (%) = ((Selling Price – Cost) ÷ Cost) × 100. Take what you sold the product for, subtract what it cost you, divide by the cost, and multiply by 100. A candle that costs $8 and sells for $20 yields a $12 profit, for a 150% markup.
The formula also runs in reverse, and that is how most store owners actually use it. To find a selling price from the markup you want, use Selling Price = Cost × (1 + Markup ÷ 100). If you want an 80% markup on a $25 item, your shelf price is $25 × 1.80, or $45.
Markup vs. Margin: The Difference That Protects Your Profit
Markup is your profit as a percentage of the cost, while margin is your profit as a percentage of the selling price. Since the cost is always the smaller number, the markup is always the larger percentage for the same product. That $8 candle, sold for $20, has a 150% markup but only a 60% margin.
The expensive mistake is wanting a certain margin but applying it as a markup. A store owner who wants to keep 40% of every sale and simply adds 40% to the cost actually keeps only 28.6%, and that shortfall repeats on every product in the store.
Markup to Margin Conversion Chart
The two numbers always convert the same way: Margin = Markup ÷ (100 + Markup) × 100. The chart below covers the markups most stores actually use, so you can see what any markup means for the share of each sale you keep, without redoing the math.
| Markup | Equivalent Margin |
|---|---|
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 33% | 24.8% |
| 40% | 28.6% |
| 50% | 33.3% |
| 75% | 42.9% |
| 100% | 50.0% |
| 150% | 60.0% |
| 200% | 66.7% |
| 300% | 75.0% |
Standard Markup Ranges by Type of Store
There is no single correct markup, because different kinds of stores work in different ways. Products that sell every day, like groceries, can survive on small markups because they sell so often. Products that sit on the shelf for weeks, like furniture or jewelry, need bigger markups to make up for all the time they spend waiting for a buyer.
| Type of Store | Typical Markup Range |
|---|---|
| Grocery and convenience staples | 10% to 35% |
| Liquor stores | 30% to 55% |
| Consumer electronics | 5% to 30% |
| Apparel and boutiques | 100% to 150% (keystone and above) |
| Furniture and home goods | 150% to 300% |
| Jewelry and accessories | 100% to 400% |
Cost-Plus Pricing With Markup
Cost-plus pricing means adding the same standard markup to everything you buy, and it is the most common way independent stores set prices for good reason. It is fast, ensures every sale covers its cost, and lets a small team price hundreds of new products without agonizing over each one.
Its weakness is that it ignores what customers are willing to pay. The same markup on everything underprices popular items that could carry more, and overprices everyday items that shoppers can compare on their phones. Cost-plus works best as a starting point that you adjust by category, with smaller markups on items people price-check and bigger markups on items shoppers cannot easily compare.
Pricing a New Product With Markup, Step by Step
Consider Dana, who runs a gift shop and just received a case of ceramic mugs at $9.50 each, plus $0.50 per mug in shipping. Her true cost is $10.00, and her standard markup for giftware is 120%, so her formula is $10.00 × (1 + 120 ÷ 100). That puts the price at $22.00, which she rounds to $21.99 for the tag.
Before printing the label, Dana checks the price against the real world rather than relying solely on the math. Similar mugs at nearby shops sell for $18 to $26, so $21.99 fits right in, and it leaves her keeping 54.5% of each sale, which clears her target. If the formula had spit out a price her customers would never pay, the markup would need to change.
Setting Markup by Category Instead of Storewide
One markup for the whole store treats a greeting card and a leather handbag as if they sell the same way, and they never do. Setting markup by category lets you match each product group to how quickly it sells, how often it gets stolen or damaged, and how closely shoppers compare its price. Items people price-check get smaller markups, while impulse buys, accessories, and items you carry get bigger markups.
Start by sorting your products into a manageable set of categories and assigning each a standard markup based on what is typical for stores like yours, along with your own sales history. New products then get the right markup automatically when they arrive, and you only step in for exceptions. Pricing stays fast, but it fits how each part of your store actually earns.
Markup, Turn Rate, and GMROI
A big markup on a product that never sells earns you nothing, which is why markup only tells half the story. The other half is how fast a product sells, and there is a measure that combines the two: GMROI, short for gross margin return on investment. It divides a product's yearly profit by the money you have tied up keeping it in stock, and by that measure, a 30% markup item that sells out twelve times a year can beat a 200% markup item that sells out twice.
This is the check that keeps markup decisions honest. Before raising a markup to make a category look better, ask whether the higher price will slow sales enough to cancel out the gain. The goal is not the biggest possible markup on each item, but the most money back on the dollars you have sitting on your shelves.
When to Break From Your Standard Markup
Standard markups are a starting point, not a law, and some situations call for purposeful exceptions. Well-known items that shoppers use to judge whether your whole store is expensive often deserve a smaller markup, so one price tag does not scare people away from everything else. Seasonal goods deserve a bigger markup at the start, because you already know you will be discounting them when the season ends.
The keyword is purposeful. Every exception should have a reason you can name, a clear list of products it covers, and a date when you look at it again. Exceptions that stick around with no review are how a careful pricing plan slowly turns into guesswork.
Three Markup Mistakes That Undermine Your Pricing
The three most common markup mistakes retailers make include:
- Reading a report that shows margin and treating the number as markup, which makes your store look worse than it is, and tempts you into price hikes you do not need.
- Using a doubled-cost markup on every category, which ignores that different parts of your store sell at different speeds to differently price-aware shoppers.
- Leaving prices alone when your suppliers raise theirs, which quietly shrinks your markup with every new order.
None of these mistakes shows up on a single receipt, which is why they last so long. They show up weeks later in your profit, after hundreds of sales have already walked out the door at the wrong price.
Your POS Can Keep Your Markups on Target
Your POS system should handle markup math at the moment it matters, which is right when new inventory arrives. KORONA Studio can automatically calculate retail prices from your supplier costs and target rates, so every new product lands on the shelf priced the way you intended. When a supplier raises prices on a reorder, you see what it does to your pricing right away, instead of finding out in next quarter's numbers.
Reporting then closes the loop by showing profit by product, category, and supplier, so you can spot the items drifting off target.
Speak with a product specialist to learn exactly what you need and how we can help.
Frequently Asked Questions
Should markup be calculated on wholesale cost or landed cost?
Landed cost, which means the full amount it took to get the product onto your shelf. That includes shipping, import fees, and other charges, in addition to the supplier's invoice. If you only mark up the invoice price, shipping costs quietly eat into every sale.
What is the difference between initial markup and maintained markup?
Initial markup (IMU) is the markup on the original price tag, while maintained markup (MMU) is what you actually ended up earning after sales, discounts, and lost or stolen goods. Stores set the initial markup high enough that the maintained markup still hits their profit target after the inevitable discounting.
How does MSRP relate to markup?
MSRP is the manufacturer's suggested retail price, and it usually already includes a typical markup for that kind of product. You are not required to follow it, and many stores price above or below MSRP based on local competition and their own costs.
What is a markup multiplier?
A markup multiplier states markup as "times the cost" instead of a percentage, so a 2.0 multiplier means doubling your cost, and a 2.5 multiplier means a 150% markup. Buyers often use multipliers because pricing a whole order is faster with multiplication than with percentages.
What markup do you need to break even?
Your breakeven markup has to cover more than what the product cost, because every sale also carries a share of rent, payroll, and other bills. Divide your total monthly expenses by what you spend on products each month, and the result is the minimum markup where you neither gain nor lose. Anything above that number is actual profit.
Should online and in-store prices use the same markup?
Not necessarily. Online orders come with their own costs, like shipping, packaging, and marketplace fees, so the same markup can earn you very different amounts in each place. Many stores keep price tags the same everywhere but track online and in-store profit separately, so they know where a sale or promotion makes sense.
