Business calculations
How to calculate markup
Markup compares profit with cost. Subtract cost from selling price to find profit, then divide that profit by cost.
Open the markup calculatorMarkup % = (selling price − cost) ÷ cost × 100
Worked markup example
A product costs $40 and sells for $60.
- Profit per unit = $60 − $40 = $20.
- Markup decimal = $20 ÷ $40 = 0.50.
- Markup percentage = 0.50 × 100 = 50%.
The price is 150% of cost: the original 100% cost plus a 50% markup.
Set a selling price from a target markup
Selling price = cost × (1 + markup percentage ÷ 100)
For a $72 cost and a 35% markup, price = $72 × 1.35 = $97.20. Profit is $25.20.
To find cost from a known price and markup, reverse the factor: cost = selling price ÷ (1 + markup decimal).
Markup is not profit margin
| Measure | Denominator | $40 cost, $60 price |
|---|---|---|
| Markup | Cost | $20 ÷ $40 = 50% |
| Margin | Revenue | $20 ÷ $60 = 33.33% |
The same transaction has a 50% markup but a 33.33% margin. Using the terms interchangeably can produce the wrong price.
Choose the right cost basis
Markup is only as useful as the cost entered. Depending on the decision, cost might include purchase price, inbound freight, packaging, transaction fees or labor. Be consistent across products. Sales tax collected from a customer is usually treated separately from revenue, but accounting treatment and rules vary.
A planned markup also does not guarantee profit after overhead, discounts, spoilage or returns. Use break-even and margin analysis for a fuller view.
Check markup with ToolPixels
The free Markup Calculator works with cost, price, profit and markup percentage. Enter the values on the same per-unit or total basis.