What Is Markup?
Markup is the amount added to a product’s cost to set its selling price, expressed as a percentage of that cost. For Shopify merchants, markup helps turn supplier or manufacturing costs into a starting price—but it does not show how much profit remains after shipping, payment fees, and other expenses.
A product can have a high markup and still earn little net profit if its operating costs are high. Use markup to set or assess a price, then compare the resulting profit with your full per-order costs.
Markup Formulas
Calculate markup from cost and selling price:
Markup (%) = ((Selling Price − Cost Price) ÷ Cost Price) × 100
Calculate selling price from cost and desired markup:
Selling Price = Cost Price × (1 + Markup (%) ÷ 100)
Calculate profit after per-order expenses:
Profit = Selling Price − Cost Price − Shipping Cost − Transaction Fee − Additional Costs
Calculate margin from markup:
Margin (%) = Markup (%) ÷ (100 + Markup (%)) × 100
Markup uses cost as its base; margin uses selling price. For example, a 100% markup corresponds to a 50% gross margin before other expenses.
How to Use This Calculator
- Enter Cost Price — include what you pay to source or manufacture one unit. If you need help identifying all cost layers, use the Cost-Plus Pricing Calculator.
- Choose the calculation direction. Enter Desired Markup to calculate a selling price, or use Find Markup from Price and enter Selling Price to calculate the markup on an existing listing.
- Enter Shipping Cost — use the average amount you pay per order when you absorb shipping. If customers pay the full shipping charge, do not count that amount as your expense.
- Enter Transaction Fee — use your payment processor’s percentage fee. Check your current Shopify Payments rate because fees vary by plan, region, and payment method.
- Enter Additional Costs — include per-unit expenses such as packaging or allocated marketing spend. Divide a shared cost by the number of units it supports to estimate the per-unit amount.
- Review the result — compare the selling price and markup with the profit left after the expenses you entered. This calculation does not replace accounting for taxes, returns, storage, or fixed overhead.
Step-by-Step Example
A Shopify merchant sells a ceramic planter and wants a 125% markup on its product cost. They also absorb shipping and pay transaction and packaging costs.
| Calculation | Amount |
|---|---|
| Cost Price | $18.00 |
| Desired Markup | 125% |
| Selling Price: $18.00 × (1 + 1.25) | $40.50 |
| Transaction fee: $40.50 × 2.9% | $1.17 |
| Shipping Cost | $4.25 |
| Additional Costs | $1.60 |
| Profit: $40.50 − $18.00 − $1.17 − $4.25 − $1.60 | $15.48 |
The markup is calculated on the product cost alone. After the listed expenses, profit is $15.48, or a 38.2% margin on the selling price: $15.48 ÷ $40.50 × 100. Adding expenses to the calculation reveals why a markup percentage is not the same as take-home profit.
Markup vs. Margin: What Changes Your Pricing Decision?
A markup answers, “How much higher is my selling price than my product cost?” A margin answers, “What share of my selling price remains after the costs included in the calculation?” Use markup when setting a price from cost; use margin when comparing profitability across products or reporting performance. The Profit Margin Calculator can help you compare gross and net margins.
Keystone pricing is a specific pricing method that doubles cost, which produces a 100% markup before other expenses. It is a convenient starting point, not a guarantee of profitability: a product with expensive fulfillment or strong price competition may need a different price. Compare the standard 2× approach with custom markup using the Keystone Pricing Calculator.
Remember that discounts reduce the actual selling price while many costs remain unchanged. Before running a promotion, check the price after the discount with the Discount Price Calculator.
Markup Benchmarks by Product Type
These are directional starting ranges, not universal industry standards. Competitor prices, customer demand, channel fees, and operating costs can make a lower or higher markup appropriate. The U.S. Small Business Administration recommends researching customers and competitors when assessing a market; use that research alongside your own cost figures rather than treating a benchmark as a target (SBA market research guide).
| Product type | Indicative markup | Equivalent gross margin |
|---|---|---|
| Commoditized products | 25–50% | 20–33% |
| General Shopify retail | 50–150% | 33–60% |
| Handmade or differentiated goods | 100–300% | 50–75% |
| Luxury or premium-positioned goods | 200–300% | 67–75% |
These margin equivalents exclude shipping, transaction fees, and other expenses. A 50% gross margin, for instance, can become a much smaller net margin after fulfillment and marketing costs.
6 Tips to Set and Test Your Markup
- Test a higher price: Change a $32 listing to $36 and compare profit after fees. Check conversion and sales volume too; a higher per-order profit can be offset if fewer customers buy.
- Recalculate after a supplier change: If a supplier raises unit cost from $14 to $16, enter the new cost before deciding whether to adjust your price. Keeping the old price reduces the dollars available to cover other costs.
- Model shipping separately: Change absorbed shipping from $0 to $6 for a product you plan to ship free. This shows how a free-shipping offer affects profit before you publish it.
- Use actual processor rates: Replace a placeholder fee with the rate shown in your Shopify Payments settings. A small percentage difference matters more on high-priced orders.
- Allocate campaign spend: If a campaign costs $240 and generates 80 orders, test $3 per order under Additional Costs. Compare the result with orders from channels that have lower acquisition costs.
- Set a discount floor: Test a 15% promotion in the Discount Price Calculator, then confirm that the reduced selling price still covers costs and leaves your minimum acceptable profit.
- Check price claims: When advertising a “sale” or comparison price, make sure the reference price is genuine and not misleading. The FTC explains U.S. rules for advertising claims in its Advertising and Marketing guide.
Frequently Asked Questions
What is markup in e-commerce?
Markup is the percentage added to the cost price of a product to determine its selling price. A product that costs $25 with a 100% markup sells for $50. Markup is calculated as (Selling Price − Cost) ÷ Cost × 100.
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. A product costing $25 and sold for $50 has a 100% markup but a 50% margin, because both percentages use a different base. Compare like with like when evaluating product performance.
What is a good markup for Shopify products?
Many Shopify stores use markups around 50–150%, while handmade or luxury products may use 200–300% and commoditized goods may use 25–50%. These ranges are starting points, not rules: the right tradeoff depends on competition, customer willingness to pay, and the expenses your price must cover.
How do I calculate selling price from markup?
Use three steps: divide the markup percentage by 100, add 1, then multiply by cost. For a $25 product with a 100% markup, $25 × (1 + 100 ÷ 100) = $25 × 2 = $50. This gives the price before accounting for separate shipping, fees, and other costs.
How do I find the markup on an existing product?
Subtract cost from selling price, divide the difference by cost, then multiply by 100. If a product costs $25 and sells for $50, ($50 − $25) ÷ $25 × 100 = 100%. Use the calculator’s Find Markup from Price mode when you know the cost and listed price.
About This Calculator
The Markup Calculator was built by Luis Dev Studio for Shopify merchants setting prices and reviewing per-order costs. For help improving your store’s pricing setup, explore our Shopify services or contact us.
Updated by Luis Gonzalez · May 23, 2026