What you pay per unit, landed.
Profit as a percentage of cost.
Markup is profit measured against your cost. Margin is profit measured against your selling price, so it is always the smaller figure.
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Markup is profit measured against your cost; margin is profit measured against your selling price. A product costing $20 and selling for $30 has a 50% markup ($10 divided by $20) and a 33.3% margin ($10 divided by $30). It is the same $10 of profit either way, and margin is always the smaller number.
Subtract the cost from the selling price, divide by the cost, then multiply by 100. For a product costing $40 and selling for $60: ($60 minus $40) divided by $40, times 100, gives a 50% markup.
Divide the markup by (100 plus the markup), then multiply by 100. A 50% markup becomes 50 divided by 150, which is a 33.3% margin. Common conversions: 20% markup is a 16.7% margin, 25% is 20%, 50% is 33.3%, 75% is 42.9%, 100% is 50%, 150% is 60%, 200% is 66.7%, and 300% markup is a 75% margin.
Divide the cost by (1 minus the margin as a decimal). For a 40% margin on a $20 item: $20 divided by 0.6 gives $33.33. Do not simply add 40% to the cost, which would give $28 and a margin of only 28.6%. This is the calculation people most often get wrong.
A 100% markup means doubling your cost, so a $25 product sells for $50. This equals a 50% margin and is known as keystone pricing.
Keystone pricing means doubling your cost: a 100% markup, or a 50% margin. It is the traditional default in apparel, gift and homeware retail because it is easy to calculate and leaves room to absorb discounting, returns and markdowns without going underwater. Many categories now price above or below keystone depending on competition.
No. Margin is profit as a share of the selling price, so 100% would mean the product cost you nothing. Markup has no upper limit: a $5 item selling for $50 carries a 900% markup and a 90% margin.
It varies more by category than most benchmarks admit. Grocery and electronics often run 10% to 25% markup and depend on volume. Apparel and accessories typically sit at or above keystone, around 100% to 200%. Beauty, supplements and jewellery frequently run 200% to 400% because acquisition costs are high and repeat purchase is the business model.
No. A high markup on a product nobody buys earns nothing, and a healthy-looking markup can still lose money once customer acquisition cost is counted. If you pay $15 to acquire a customer on a product carrying $10 of gross profit, the first order is a loss. Gross profit per unit times volume, minus acquisition cost, is the number that matters.
More than most people expect, because discounts come out of margin rather than markup. On a 33% margin, a 20% discount does not cost a fifth of your profit, it costs roughly 60% of it. Before running a sitewide sale, check the post-discount margin on your actual bestsellers rather than an average product.
No. It works on pre-tax figures. Enter your cost and price excluding tax, since tax is collected on behalf of the government rather than kept as profit.
Yes. There is no signup, no email required and no limit on how many calculations you run. It is built by Mage Loyalty, a loyalty and referrals app for Shopify.
Mage is a loyalty, referral and store credit app built for Shopify. Reward repeat purchases, run VIP tiers, and give customers a reason to come back, without writing a line of code.
