Free tool
Enter your cost price and desired markup or margin percentage to calculate the selling price. See the difference between markup and margin side by side.
Selling Price
$15.00
50% markup
Profit / Unit
$5.00
revenue minus cost
Equivalent Margin
33.3%
% of selling price
Monthly Profit
$2,165.00
100 units/week
Total cost per unit
% added on top of cost
For profit projections
Markup vs Margin — same cost, same percentage
50% Markup
$15.00
Profit: $5.00 (33.3% margin)
50% Margin
$20.00
Profit: $10.00 (100.0% markup)
Using margin instead of markup gives a $5.00 higher selling price at the same percentage. This is why confusing the two leads to underpricing.
Profit projections at 100 units/week
Highlighted row is closest to your current calculation
25–28% food cost
28–32% food cost
30–35% food cost
28–32% food cost
15–25% food cost
20–28% food cost
Price every dish with confidence
Track ingredient costs, calculate selling prices automatically, and keep margins healthy across your entire menu.
Start free with DishCostHow it works
Two ways to set a selling price — by markup or by margin. They give different results from the same percentage, and confusing the two is one of the most common pricing mistakes.
Add up everything that goes into the product — ingredients, packaging, any direct costs. This is your baseline.
Markup adds a percentage on top of cost. Margin takes a percentage of the final selling price. A 50% markup on a $10 item = $15. A 50% margin on a $10 item = $20. Big difference.
For markup: Cost × (1 + Markup%). For margin: Cost ÷ (1 − Margin%). Always check the other metric too — a 50% markup is only a 33% margin.
The formula
Markup: Price = Cost × (1 + Markup%) · Margin: Price = Cost ÷ (1 − Margin%)
Tips
FAQ
Markup is profit as a percentage of cost (what you paid). Margin is profit as a percentage of selling price (what the customer pays). A $10 item sold for $15 has a 50% markup but only a 33.3% margin.
The formulas:
Markup % = (Selling Price − Cost) ÷ Cost × 100
Margin % = (Selling Price − Cost) ÷ Selling Price × 100
The markup percentage is always higher than the margin percentage for the same product. Confusing the two is one of the most common pricing mistakes in food service — and it directly erodes profit.
Most restaurants use a 200-300% markup on food (3x to 3.6x the ingredient cost), which translates to a 28-32% food cost percentage (margin). Beverages carry even higher markups — 300-575% depending on category.
By restaurant type:
Fast casual: 250-350% markup (22-28% food cost)
Full-service casual: 200-300% markup (28-32% food cost)
Fine dining: 185-230% markup (30-35% food cost)
Use our menu pricing calculator to find the right price for each dish based on your target food cost. For more on restaurant margins, see our guide on restaurant profit margins.
Two formulas to memorize:
Margin = Markup ÷ (1 + Markup)
Markup = Margin ÷ (1 − Margin)
Quick reference table:
100% markup = 50% margin
150% markup = 60% margin
200% markup = 66.7% margin
233% markup = 70% margin (30% food cost)
300% markup = 75% margin (25% food cost)
Example: a 30% food cost (margin) converts to 42.9% markup. 0.30 ÷ (1 − 0.30) = 0.429. Most restaurant operators think in margin (food cost %), not markup.
You're likely confusing markup with margin. If you set a 50% markup thinking you'd keep 50% of revenue as profit, you're actually only keeping 33.3%. To keep 50% of revenue, you need a 100% markup (2x your cost).
Another common cause: your cost calculation is incomplete. If you're only counting raw ingredients but ignoring waste (typically 5-10% of food purchases), packaging, or prep labor, your real cost is higher than you think — and your true margin is lower. Use our food cost calculator to get an accurate cost baseline.
Use whichever metric your industry uses. Restaurants think in margin (food cost percentage) — "we run 30% food cost" means 30% of revenue goes to ingredients. Retail and wholesale use markup — "we mark up 100%" means the selling price is double the cost.
The important thing is consistency across your team. If your chef says "30%" and your accountant hears "30% markup" instead of "30% margin," every price will be wrong. This calculator shows both numbers side by side so you can cross-check.
This calculator covers direct costs (ingredients, materials, packaging). Labor, rent, and utilities are overhead costs that aren't included in food cost percentage.
To be profitable, track your prime cost (food + labor), which should stay under 60-65% of revenue. Typical breakdown for a full-service restaurant:
Third-party delivery platforms charge 15-30% commission on every order. If you use the same menu price for delivery, your effective margin drops dramatically. A dish with 30% food cost sold on a platform charging 25% commission leaves you with only 45% of revenue — barely enough to cover labor and overhead.
Most restaurants handle this by: raising delivery menu prices by 15-20%, adding a delivery surcharge, or reducing portion sizes for delivery-only items. Some create a separate, simplified delivery menu with items that travel well and maintain higher margins.
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Start free with DishCost