Margin vs Markup For Jewelers.
Margin and markup describe the same profit two different ways. Confusing them is one of the most expensive mistakes in jewelry pricing, because it quietly underprices every piece.
Updated
The Two Formulas
Both start from the same profit: selling price minus cost. They differ only in what they divide it by.
- Markup = (price − cost) ÷ cost
- Margin = (price − cost) ÷ price
A Worked Example
A pair of earrings costs you $400 and sells for $1,000. The profit is $600. As a markup that is $600 ÷ $400 = 150%; as a margin it is $600 ÷ $1,000 = 60%. Same earrings, same profit, two very different-looking percentages.
Why The Difference Matters
Suppose you want a 50% margin and apply a 50% markup instead. A piece that cost $1,000 is priced at $1,500 instead of $2,000: a 33.3% margin instead of 50%, and $500 of profit instead of the $1,000 you planned — on every piece priced that way. Decide which number you set your targets in, and use it consistently.
What Keystone Means
Keystone means doubling the cost: a 100% markup, which is a 50% margin. It is a common reference point in jewelry pricing, and many businesses price above or below it by category — lower on pieces whose cost is mostly metal, higher on designer and fashion pieces.
Converting Between Them
Margin = markup ÷ (1 + markup). Markup = margin ÷ (1 − margin). Or use the table.
| Markup | Price multiplier | Margin |
|---|---|---|
| 25% | 1.25 × cost | 20% |
| 50% | 1.5 × cost | 33.3% |
| 75% | 1.75 × cost | 42.9% |
| 100% (keystone) | 2 × cost | 50% |
| 150% | 2.5 × cost | 60% |
| 200% (triple key) | 3 × cost | 66.7% |
| 300% | 4 × cost | 75% |
Start From The Real Cost
Either percentage is only as honest as the cost it is built on. For jewelry, that means the supplier's price in your currency, plus the cost of bringing the piece in — freight, insurance and duty — plus any making or setting charges. Leave those out and every margin looks better on paper than it is in the bank.