Markup is how much you add on top of what something cost you, expressed as a percentage of that cost. It is the natural way to price when you start from a supplier's invoice and apply a rule: buy at $60, add 50%, sell at $90. BDC describes it the same way, as a percentage of the cost of goods sold.
The formula is profit divided by cost. An item bought for $60 and sold for $100 has $40 of profit and a markup of 40 ÷ 60, or 66.67%. To price from a markup, multiply the cost by one plus the markup: $60 × 1.5 is $90 at 50%.
The trap is that the same sale has a much smaller gross margin, because margin divides the same $40 by the $100 price instead of the $60 cost. Markup is always the larger number, and the gap widens as prices rise: a 25% markup is a 20% margin, a 100% markup is a 50% margin, and a 300% markup is a 75% margin. Markup has no ceiling, while margin can never reach 100%. To convert, divide the markup by one plus the markup; to go back, divide the margin by one minus the margin.
That gap is where pricing goes wrong. Suppliers and trades often quote markups, while business plans, accounts and lenders talk in margins. If your plan needs a 40% margin and you add 40% to cost, you have priced for a 28.6% margin, and every unit sold falls short.
The margin calculator shows markup and margin side by side for any cost and price, and can work out the price from either a target markup or a target margin, so you can check one against the other before you set a price.