Markup Calculator

About the Markup Calculator

Markup is the amount you add on top of what something costs you, expressed as a percentage of that cost. It is the way many shops, trades and wholesalers set prices — "cost plus 50%" — because it is quick to apply to a price list.

This markup calculator works in three directions. It gives the selling price from a cost and a markup; the markup percentage between a cost and a price; and the cost that fits a target price at a given markup. It always shows the margin too, because markup and margin are easy to confuse and the difference matters when you are judging whether a price is profitable.

How to Use the Markup Calculator

Choose what you want to find:

Selling price — enter the cost per item and the markup percentage.

Markup % — enter the cost and the selling price.

Cost from a price — enter the selling price and the markup you want.

Use costs and prices before sales tax or VAT.

How Markup Is Calculated

  price    =  cost × (1 + markup)
  markup   =  (price − cost) ÷ cost
  cost     =  price ÷ (1 + markup)

  margin   =  markup ÷ (1 + markup)

Step-by-Step Example

A 50% markup on an item that costs 40.

  Price:    40 × 1.50         =  60
  Profit:   60 − 40           =  20
  Margin:   20 ÷ 60           =  33.33%

The markup on an item bought for 40 and sold for 70.

  Markup:   (70 − 40) ÷ 40    =  75%
  Margin:   30 ÷ 70           =  42.86%

The most you can pay to sell at 90 with a 50% markup.

  Cost:     90 ÷ 1.50         =  60

Markup to Margin Conversion

To turn a markup into a margin, divide it by one plus the markup. To go the other way, markup equals margin divided by one minus the margin: a 40% margin needs a 66.67% markup.

Why Markup and Margin Get Confused

Both describe the same profit. On an item that costs 40 and sells for 60, the profit is 20 either way. Markup compares it with the 40 you paid, giving 50%. Margin compares it with the 60 the customer paid, giving 33.33%.

The confusion becomes expensive when a business plans on a 50% margin but prices with a 50% markup. The prices look right, but every sale earns a third less profit than the plan assumed, and overheads that were meant to be covered are not.

Common Markup Practices

Keystone pricing means a 100% markup — selling at double the cost — which gives a 50% margin. It has long been a starting point in retail.

Cost-plus pricing adds a fixed markup to the full cost of a job, common in construction, manufacturing and government contracts.

Tiered markups use a higher percentage on cheap items and a lower one on expensive items, so low-priced products still earn enough profit to be worth handling.

Whatever the method, check the resulting margin against the overheads the business has to cover.

Choosing a Markup

There is no single right markup. The right figure depends on what the business has to pay for and what customers will accept.

Start from your overheads. Add up rent, wages and other running costs for a period, and compare them with the cost of the goods you expect to sell. The markup has to cover that gap before it produces any profit.

Look at the market. If similar products sell at a known price, work back with the cost mode to see what you can afford to pay a supplier.

Think about turnover. Items that sell quickly can carry a lower markup, because the money comes back sooner. Slow-moving or perishable stock usually needs a higher one to cover the time it sits on the shelf and the items that never sell.

Review regularly. Supplier prices change. A markup that was comfortable last year may leave too little once costs rise.

Markup on Services

Markup applies to labour as well as goods. A contractor who pays a worker 30 an hour and charges the client 45 is working on a 50% markup, which is a 33.33% margin. The same conversion table applies, and the same trap: quoting a 50% markup as a 50% margin overstates the profit by half.

Understanding Your Result

Result is the answer to your question: the price, the markup or the cost.

Profit is the amount earned on each sale.

Margin is that profit as a share of the selling price.

Cost plus markup shows how the price is built up.

Worth knowing gives the margin equivalent of your markup and some common pairs, or warns if the price is below cost.

When Should You Use This Calculator?

Pricing stock from supplier invoices.

Quoting jobs on a cost-plus basis.

Checking what markup a competitor's price implies.

Working back from a market price to what you can pay a supplier.

Converting between markup and margin for reports and planning.

Common Mistakes

Treating markup as margin. A 50% markup is a 33.33% margin, not 50%.

Subtracting the markup to get back to cost. Divide by (1 + markup) instead: 90 less 50% is 45, but the cost behind a 50% markup on 90 is 60.

Marking up the price including tax. Mark up the net cost, then add tax.

Using the same markup for every product without checking the margin each one earns.

Forgetting overheads. The markup has to pay for rent, wages and everything else before it becomes profit.