What is markup and how is it calculated?

Markup is the amount added to a product's cost to set its selling price. It is expressed as a percentage of the cost. The formula is: Markup % = (Selling Price - Cost) / Cost × 100. For example, if a product costs $40 and sells for $60, the markup is 50%. This is different from profit margin, which is calculated as a percentage of the selling price.

What is the difference between markup and profit margin?

Markup is the percentage added to the cost to reach the selling price, so it is based on cost. Profit margin is the profit as a percentage of the selling price. A 50% markup on a $40 item gives a $60 selling price, but the profit margin is only 33.3% ($20 profit / $60 price). Markup is always a higher number than the equivalent margin for the same transaction.

How do I find the selling price from cost and markup?

Use this formula: Selling Price = Cost × (1 + Markup % / 100). For example, a product costing $50 with a 40% markup: $50 × 1.40 = $70 selling price. The profit is $20 and the margin is 28.6%.

What markup percentage should I use for my business?

Typical markup percentages vary by industry. Retail clothing often uses 50–100%, grocery stores use 10–25%, electronics use 20–40%, restaurants mark up food 200–300% over ingredient cost, and professional services often mark up time by 50–150%. The right markup depends on your costs, competition, and desired profit margin.

How do I convert a markup percentage to a profit margin?

To convert markup to margin: Margin % = Markup % / (1 + Markup % / 100). For a 50% markup: 50 / (1 + 0.50) = 33.3% margin. To go the other way, Markup % = Margin % / (1 - Margin % / 100). For a 30% margin: 30 / (1 - 0.30) = 42.9% markup.

Markup Price Calculator – Calculate Selling Price, Profit Margin & Markup Percentage from Cost

Markup Price Calculator

Enter your cost and markup percentage to instantly see the selling price, gross profit, and profit margin — free online markup calculator for any product or service.

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Markup vs margin included

Enter Your Pricing Details

Cost Price ($)

What you pay to make or buy this item

Markup Percentage (%)

Profit added on top of cost

Calculate From

Currency Symbol

Sales Tax / VAT Rate (%)

Adds tax on top of the selling price

Number of Units

See total profit across multiple units

Shipping / Overhead Cost ($)

Added to cost before calculating markup

Discount (%)

Shows margin after discount is applied

Your Pricing Breakdown

Fill in your cost and markup on the left and click Calculate to see the full pricing breakdown.

Selling Price

$0.00

per unit

Price Breakdown

Cost Price —

Markup Percentage —

Gross Profit (per unit) —

Profit Margin —

Tax / VAT Added —

Price After Tax —

Discounted Sell Price —

Margin After Discount —

Total Profit (1 units) —

Markup vs Margin

Markup0%

Margin0%

Markup is % of cost. Margin is % of selling price. Markup is always the larger number for the same transaction.

Price Composition

Selling Price vs Markup at Different Rates

What Is Markup and How Does It Work?

Markup is the extra amount you add to the cost of a product to arrive at its selling price. It is always expressed as a percentage of the cost — not the selling price. That distinction is what makes markup different from profit margin.

For example, if you buy a item for $40 and want a 50% markup, you add $20 to get a selling price of $60. Your profit is $20, but your profit margin is only 33.3% because margin is measured against the selling price, not the cost.

Markup pricing is one of the simplest and most common methods for setting prices in retail, wholesale, and service businesses.

Markup Price Formulas

The three most useful formulas for markup pricing:

Selling Price = Cost × (1 + Markup% ÷ 100)
Markup% = (Selling Price − Cost) ÷ Cost × 100
Profit Margin% = (Selling Price − Cost) ÷ Selling Price × 100

Convert markup to margin: Margin% = Markup% ÷ (1 + Markup% ÷ 100)

Convert margin to markup: Markup% = Margin% ÷ (1 − Margin% ÷ 100)

Typical Markup by Industry

Industry	Typical Markup	Approx. Margin
Grocery / Food	10–25%	9–20%
Clothing / Fashion	50–100%	33–50%
Electronics	20–40%	17–29%
Jewellery	100–200%	50–67%
Restaurant (food cost)	200–300%	67–75%
Software / SaaS	200–500%	67–83%
Pharmaceuticals	50–100%	33–50%
Furniture	100–200%	50–67%
Auto Parts	40–80%	29–44%
Freelance Services	50–150%	33–60%

Markup vs Margin — Key Differences

Markup is calculated on cost. Margin is calculated on revenue. Both describe profit, but they give different percentages for the same transaction — which causes a lot of confusion in business.

A 50% markup on a $40 cost → $60 selling price, 33.3% margin
A 50% margin on a $40 cost → $80 selling price, 100% markup
Markup is always higher than the equivalent margin for the same product
Finance and accounting teams typically use margin; sales teams often use markup

This calculator shows you both numbers together so there is no confusion when switching between perspectives.

Pricing Tips for Small Businesses

Know all your costs. Include shipping, packaging, labour, and overhead before applying markup — not just the product cost alone.
Research your competitors. Your markup needs to produce a price that customers will actually pay in your market.
Account for discounts. If you plan to run sales, build in enough markup so a 20% discount still leaves you profitable.
Review regularly. As supplier costs rise, your fixed-markup prices may slowly eat into your profit. Recalculate at least quarterly.
Don't confuse markup with margin. If your accountant talks about a 40% margin and you price using 40% markup, you will end up with far less profit than expected.

Cost-Plus Pricing Explained

Cost-plus pricing — also called markup pricing — is the simplest pricing strategy. You calculate your total cost per unit and then add a fixed percentage on top as profit. It is widely used in manufacturing, retail, and construction because it is transparent and easy to explain to customers.

The main advantage is simplicity: once you know your cost, pricing is mechanical. The main downside is that it ignores what customers are willing to pay. A product might sell easily at triple the markup you applied, or customers might resist even a modest markup if a cheaper substitute exists.

For best results, combine cost-plus pricing with a competitive analysis — make sure your price lands in a range the market supports.

Common Questions About Markup Pricing

Markup is the percentage you add to your cost to set a selling price — it is based on cost. Profit margin is the profit as a percentage of the selling price. For the same product, markup is always a higher number than the equivalent margin. A 50% markup gives you a 33.3% margin, not 50%. This difference trips up many business owners who mix the two terms up.

Use this formula: Selling Price = Cost × (1 + Markup% ÷ 100). If your cost is $50 and you want a 40% markup, the selling price is $50 × 1.40 = $70. Your profit is $20 and your profit margin is 28.6%.

It depends on your industry, costs, and competition. Grocery stores use 10–25%, clothing retailers use 50–100%, jewellers often use 100–200%, and restaurants commonly mark food up 200–300%. The right number is whatever keeps your price competitive while covering all costs (including overhead) and leaving enough profit to sustain the business.

Margin% = Markup% ÷ (1 + Markup% ÷ 100). For a 50% markup: 50 ÷ 1.50 = 33.3% margin. To go the other direction, Markup% = Margin% ÷ (1 − Margin% ÷ 100). For a 30% margin: 30 ÷ 0.70 = 42.9% markup. The converter table in the Reference Tables section above shows the most common conversions at a glance.

A discount reduces the selling price but does not change your cost, so it directly cuts into your margin. If you apply a 20% discount to a product you marked up 50%, your effective margin drops significantly. Use the Discount field in Advanced Options to see exactly what margin you are left with after any discount you plan to offer.

Yes, if the customer does not pay shipping separately, you should add shipping (and any other overhead like packaging or labour) to your cost before applying the markup. The Shipping / Overhead Cost field in Advanced Options does this automatically so your markup and margin reflect the true economics of selling the item.

Selling Price at Common Cost & Markup Combinations

What selling price you get from different costs and markup percentages.

Cost	10% Markup	25% Markup	50% Markup	75% Markup	100% Markup	150% Markup

Selling Price = Cost × (1 + Markup ÷ 100). Highlighted values show 50%+ markup — common in retail and consumer goods.

Markup % to Profit Margin % Conversion Table

Every markup percentage and its equivalent profit margin. Markup is always higher than the equivalent margin.

Markup %	Profit Margin %	Cost Multiplier	Meaning

Margin% = Markup% ÷ (1 + Markup% ÷ 100). A 50% markup gives only 33.3% margin — they are not the same number.

Gross Profit per Unit at Different Cost & Markup Levels

How much profit you earn per unit sold at various cost and markup combinations (currency symbol updates with your selection).

Cost	20% Markup	40% Markup	60% Markup	80% Markup	100% Markup

Profit = Cost × Markup ÷ 100. Currency symbol updates when you change the Currency setting in the calculator.

Total Profit Across Units at 50% Markup

Total profit you earn by selling different quantities at a 50% markup on common cost prices.

Cost/Unit	Sell Price	Profit/Unit	10 Units	50 Units	100 Units	500 Units

Assumes 50% markup. Use the calculator above with the Units field to project any markup × quantity combination.

Final Customer Price After Tax at Common Tax Rates

Selling price plus tax at common VAT / sales tax rates (10%, 15%, 20%, 25%) for a range of selling prices.

Selling Price	+10% Tax	+15% Tax	+20% Tax	+25% Tax

Price after tax = Selling Price × (1 + Tax Rate ÷ 100). Tax is added on top of the selling price and does not change your markup or margin.