Markup Calculator

How to use the markup calculator

Start with the cost: what you pay to buy or make one item, or to deliver one service. Then fill in exactly one of the three optional boxes, whichever you already know:

• Markup (%), to find the selling price and the profit it produces.
• Profit ($), to find the selling price and the markup that profit represents.
• Revenue ($), the price you charge, to find the profit and the markup.

Whatever you enter, the result also shows the margin, so you can see both views of the same sale side by side. If you fill in more than one optional box, revenue is used first, then profit, then markup. A box left at zero counts as empty, and the cost must be above zero.

What is markup?

Markup is the amount added to the cost of a product or service to arrive at its selling price. It is usually stated as a percentage of the cost: a 50% markup means you add half of the cost on top of it.

Cost-plus pricing is the simplest way to set a price. A shop buys goods, applies a standard markup and sells at the result. Because markup is measured against what you paid, it answers the question "how much did I add to my cost?" and is easy to apply across a whole catalogue.

Markup should not be confused with margin, which measures the same profit against the selling price. The two always move together, but they are different numbers for the same sale.

Markup formulas

With cost, revenue (selling price) and profit, the relationships are:

profit = revenue − cost

markup % = profit ÷ cost × 100

selling price = cost × (1 + markup % ÷ 100)

margin % = profit ÷ revenue × 100

A markup can also be negative. If you sell below cost, the profit is a loss and the markup and margin both come out below zero. The calculator accepts a revenue lower than the cost for this reason.

How to calculate markup from cost and price

When you know what you paid and what you charge, subtract to get the profit, then divide by the cost.

Example: a bookshop buys a title for $18 and sells it for $27. The profit is 27 − 18 = $9. The markup is 9 ÷ 18 × 100 = 50%, while the margin is 9 ÷ 27 × 100 = 33.33%.

The same sale looks like a 50% markup or a 33.33% margin. Both are correct; they simply use different bases.

How to calculate a markup price

To price an item from a target markup, multiply the cost by one plus the markup written as a decimal.

Example: a workshop's materials for a table cost $250 and it applies a 60% markup. The price is 250 × 1.60 = $400, which means a profit of $150 and a margin of 150 ÷ 400 = 37.5%.

If you know the profit you want in dollars rather than a percentage, add it to the cost directly. Cost $40 plus a desired profit of $14 gives a price of $54, a markup of 35% and a margin of 25.93%.

Markup vs margin

Markup divides profit by cost; margin divides the same profit by revenue. Since revenue is larger than cost whenever there is a profit, margin is always smaller than markup (and never exceeds 100%), while markup has no upper limit.

margin % = markup % ÷ (100 + markup %) × 100Converting a markup into the margin it produces.

markup % = margin % ÷ (100 − margin %) × 100Converting a margin into the markup needed to reach it.

A common pricing mistake is to treat a desired margin as a markup. If you want a 30% margin on an item that costs $70, adding 30% gives $91, which is only a 23.08% margin. The price that delivers a 30% margin is 70 ÷ (1 − 0.30) = $100, a markup of about 42.86%.

Assumptions and limits

• Results are in dollars, but the arithmetic is the same for any currency.
• Cost means the full cost of the item you are pricing. Overheads such as rent, wages and marketing are not added automatically; include them in the cost if you want the markup to cover them.
• Taxes are not included. Add them afterwards, for example with the VAT calculator, so your markup is not distorted.
• Amounts are rounded to cents and percentages to two decimals for display.
• To see how many units you must sell before the markup pays for your fixed costs, use the break-even calculator.