Markup Calculator
Markup measures how much a price is increased above its cost. Retailers, wholesalers, contractors, and service businesses can use markup calculations to set prices and understand the relationship between cost, selling price, and profit.
Quick Answer
Markup % = (Selling Price β Cost) Γ· Cost Γ 100. If an item costs $50 and sells for $75, the $25 profit represents a 50% markup on cost.
Inputs Explained
Cost: The base amount used for pricing. Markup percentage: The percentage added to cost. Selling price: Cost plus the markup amount. If you know the target markup, the simplified price formula is Selling Price = Cost Γ (1 + Markup), where markup is written as a decimal.
How to Use the Calculator
- Enter the product or service cost.
- Enter the markup percentage or selling price, depending on the calculator fields.
- Calculate the markup amount and final selling price.
- Check the resulting margin separately if margin is also important to your pricing decision.
Worked Examples
Example 1: A product costs $50 and has a 40% markup. Markup = $20, so the selling price is $70.
Example 2: A $100 item with a 25% markup sells for $125. The $25 increase is 25% of the original cost.
Example 3: A product costs $80 and sells for $120. Profit is $40, so markup = 40 Γ· 80 Γ 100 = 50%.
Markup Examples
| Cost | Markup | Markup Amount | Selling Price |
|---|---|---|---|
| $50 | 20% | $10 | $60 |
| $50 | 40% | $20 | $70 |
| $100 | 25% | $25 | $125 |
| $80 | 50% | $40 | $120 |
Markup vs Margin
Markup is based on cost, while margin is based on selling price. For an item costing $50 and selling for $75, markup is 50%, but margin is 33.33%. This distinction matters when a business sets a target percentage and converts that target into a price.
Common Mistakes
- Calculating markup from selling price instead of cost.
- Assuming a 50% markup produces a 50% margin.
- Forgetting shipping, labor, payment fees, or other costs that should be included in the pricing basis.
- Applying the same markup to every product without considering demand and operating expenses.