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Retail Markup & Margin Calculator

Calculate selling price, gross margin, and profit instantly. Includes a sensitivity analysis table to compare pricing strategies at different markup levels.

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About

Retailers and dropshippers frequently confuse Markup with Gross Margin. This distinction defines the difference between bankruptcy and profitability. Markup is the percentage added to the cost price to determine the selling price. Gross Margin is the percentage of the selling price that is profit. A 50% markup does not equal a 50% margin (it equals 33.3%). This tool calculates both metrics simultaneously to prevent pricing errors. It alerts users if a strategy results in negative margins and generates a sensitivity table to visualize how small percentage adjustments impact the final bottom line.

retail math pricing strategy dropshipping tool profit margin cost plus

Formulas

The calculator uses the Cost-Plus pricing model. To determine the Final Selling Price (P) from Cost (C) and Markup Percentage (M):

P = C × (1 + M100)

Conversely, the Margin (G) is derived as:

G = (1 − 11 + (M/100)) × 100

Reference Data

MetricDefinitionFormula
MarkupPercentage added to CostPrice − CostCost × 100
Gross MarginPercentage of Revenue kept as ProfitPrice − CostPrice × 100
ProfitActual Currency ValuePrice − Cost
CostOriginal expense to acquire itemPrice ÷ (1 + Markup)

Frequently Asked Questions

Keystone pricing suggests a 50% markup (doubling the cost), which results in a 50% gross margin only if overhead is zero. Realistically, retail markups range from 50% to 300% depending on inventory turnover rates.
Margin is calculated based on the total selling price, which is a larger number than the cost. Since the denominator is larger, the percentage value is always lower than the markup percentage.
This tool calculates forward from Cost + Markup. To reverse it: if you need a 20% margin, the markup required is Margin / (1 - Margin), which would be 0.20 / 0.80 = 25% Markup.