Markup Calculator
First published:
This free markup calculator helps you find selling price, markup %, and profit instantly.
Need help? Contact us.
Disclaimer: Results are for informational purposes only and do not constitute financial, accounting, or business advice. Always consult a qualified professional for decisions with material financial consequences.
- Markup = profit based on cost
- Used to set selling price
- Always higher than profit margin
- Simple formula: (Price − Cost) ÷ Cost
What is markup?
The basic rule of a successful business is to sell a product or service for more than it costs to produce or acquire. Markup (or markon) is the ratio of gross profit to cost of goods sold (COGS), expressed as a percentage. As a general guideline, markup must be set high enough to cover all overheads and deliver a reasonable net profit after fixed costs.
For example, if you buy a product for $80 and sell it for $100, your gross profit is $20. The ratio of profit ($20) to cost ($80) is 25%, so your markup is 25%.
Now that you know the markup definition, keep in mind that it is easy to confuse markup with profit margin; they are related but calculated very differently. More on that below.
Markup formula (with examples)
The markup formula is: markup = 100 × profit ÷ cost. We multiply by 100 to express it as a percentage rather than a decimal. Note that the markup formula is simply a percent increase formula applied to cost price.
If you don't know profit directly but you know cost and revenue, substitute profit = revenue − cost. The full markup formula then becomes:
Go ahead and try entering different numbers into the markup calculator above. Fill in any two fields and the remaining values are calculated automatically.
How to calculate markup step-by-step
To calculate markup by hand:
- Determine your COGS (cost of goods sold). For example,
$40. - Find your gross profit by subtracting cost from revenue. If the product sells for
$60, profit is$20. - Divide profit by COGS:
$20 ÷ $40 = 0.50. - Express as a percentage:
0.50 × 100 = 50%. - That's your markup, or simply use our markup tool.
Markup vs margin (key difference)
Profit margin is the ratio of profit to revenue, while markup is the ratio of profit to cost. This single difference in denominator means they will never be equal for the same transaction, and confusing the two is one of the most costly pricing mistakes a business can make.
Using the same example: you buy for $80, sell for $100, profit is $20.
| Markup | Profit Margin | |
|---|---|---|
| Definition | Profit as % of cost | Profit as % of revenue |
| Formula | (Revenue − Cost) ÷ Cost × 100 | (Revenue − Cost) ÷ Revenue × 100 |
| Example ($80 cost, $100 revenue) | $20 ÷ $80 × 100 = 25% | $20 ÷ $100 × 100 = 20% |
| Base | Cost price (smaller) | Selling price (larger) |
| Result | Always higher number | Always lower number |
A 50% markup always produces a 33.3% profit margin, never 50%. If your accountant reports in margins and your suppliers quote in markup, you need to be fluent in both.
Common markup mistakes
- Confusing markup with profit margin
- Using the same markup for every product
- Ignoring overhead costs
- Not updating markup when costs change
Ready to calculate your markup? Use our free tool above to get instant results.
Markup and cost-plus pricing
One of the most widespread pricing strategies, cost-plus pricing, is built entirely on markup. The business sets the price of its products by applying a standard markup percentage to unit costs:
The reason for the popularity of this approach is its simplicity: the markup percentage is typically set according to what is standard in the industry or based on rules of thumb passed down through the business. Around 75% of companies employ some form of cost-plus pricing.
The main limitation is that it ignores demand. If you sell umbrellas and it rains for a week straight, customers would happily pay more, but your fixed markup keeps your price the same. For commoditised products where competitors have similar costs and apply similar markups, cost-plus pricing tends to produce near-optimal results. For everything else, pairing it with demand analysis gives you a meaningful pricing edge.
Markup by industry: typical rates
Markups vary enormously between sectors, driven by cost structure, inventory risk, competition, and brand power. Here are typical rates across common industries:
| Industry | Typical markup | Key driver |
|---|---|---|
| Grocery retail | ~15% | High volume, low overhead per unit |
| Restaurants (food) | ~60% | High labour and wastage costs |
| Restaurants (beverages) | Up to 500% | Near-zero COGS, high perceived value |
| Clothing & apparel | 150–250% | Inventory risk, markdowns, branding |
| Jewellery | 50–200% | Low unit volume, brand premium |
| Consumer electronics | 5–30% | Highly competitive, price-sensitive buyers |
| Software / SaaS | 200–1000% | Near-zero marginal cost |
| Professional services | 100–300% | High skilled-labour cost base |
It is worth noting that a high markup does not automatically mean high profit. Restaurants use some of the largest markups of any consumer-facing industry, yet sector profitability is notoriously thin; rent, staff, utilities, and wastage consume almost all of the gross margin.
Some specific products carry extraordinary markups worth knowing: movie theatre popcorn averages around 1,275%, bottled water can reach 4,000%, and prescription drugs range from 200% to 5,000% depending on patent status and market dynamics.
Markup to margin conversion table
Use this quick-reference table to convert any markup percentage to its equivalent profit margin, and to see the resulting selling price on a $100 cost item.
| Markup % | Profit Margin % | Cost ($100) | Selling price |
|---|---|---|---|
| 10% | 9.09% | $100.00 | $110.00 |
| 20% | 16.67% | $100.00 | $120.00 |
| 25% | 20.00% | $100.00 | $125.00 |
| 33% | 24.81% | $100.00 | $133.00 |
| 50% | 33.33% | $100.00 | $150.00 |
| 75% | 42.86% | $100.00 | $175.00 |
| 100% | 50.00% | $100.00 | $200.00 |
| 150% | 60.00% | $100.00 | $250.00 |
| 200% | 66.67% | $100.00 | $300.00 |
Other considerations when setting markup
While cost-plus pricing gives you a solid floor, the most effective pricing strategies layer additional considerations on top:
- Lower-priced products often carry higher markup percentages. A $2 item marked up 200% generates $4 in revenue. A $2,000 item at 10% markup generates $200 more. Both can be rational depending on volume and overheads.
- Fast-moving inventory justifies a lower markup. If you can turn stock over quickly, a lower margin per unit multiplied by high volume can outperform a high-margin, slow-moving product.
- Key-value items need lower markup. Consumers have strong price memory for everyday staples. Pricing these above market damages trust even when other items in the range have healthy margins.
- Adjust markup to competition. In highly competitive markets, market price sets your ceiling. Your cost efficiency determines whether you can operate profitably within that ceiling.
- Review markup regularly. In inflationary environments, input costs shift fast. A markup set 12 months ago may now be delivering a fraction of its intended profit margin without anyone noticing.
Frequently Asked Questions
What is markup?
Markup (also written as 'mark up') is the percentage added to a product's cost price to arrive at its selling price. It represents profit as a ratio of cost. For example, if a product costs $50 and you sell it for $75, the markup is 50%, because the $25 profit is 50% of the $50 cost.
What is the markup formula?
The markup formula is: Markup % = ((Selling Price − Cost) ÷ Cost) × 100. To find selling price: Selling Price = Cost × (1 + Markup % ÷ 100). To find cost: Cost = Selling Price ÷ (1 + Markup % ÷ 100).
What is the difference between markup and profit margin?
Markup is profit expressed as a percentage of cost price. Profit margin is profit expressed as a percentage of selling price. Because cost is always lower than selling price, markup is always a higher number than margin for the same transaction. A 50% markup equals a 33.3% profit margin, never 50%.
What is a good markup percentage?
A good markup percentage depends on your industry and cost structure. Grocery retail typically applies around 15%, restaurants 60–300%, clothing 100–250%, and software or professional services 200–400%. The right markup for your business must cover all overheads and deliver your target profit margin.
How do I calculate markup on a product?
To calculate markup: (1) subtract cost from selling price to find gross profit, (2) divide gross profit by cost, (3) multiply by 100 to get the percentage. Example: ($75 selling price − $50 cost) ÷ $50 × 100 = 50% markup.
Is markup the same as profit?
No. Markup is a percentage that tells you how much was added to the cost to reach the selling price. Profit (or gross profit) is the actual dollar amount earned, the difference between revenue and cost. The same dollar profit produces a higher markup % than margin % because markup uses the smaller cost as its base.
How do I calculate selling price using a markup percentage?
Multiply your cost by (1 + markup ÷ 100). For example, if your cost is $80 and your target markup is 75%, the selling price is $80 × 1.75 = $140.
Can I use this markup calculator for services?
Yes. For service businesses, your 'cost' is the total cost of delivering the service: staff time, materials, software, and a proportion of your overhead. Enter that figure as the cost and your desired markup to find your rate. Many consultants and agencies use a 100–300% markup on their cost base.
What is cost-plus pricing?
Cost-plus pricing (also called markup pricing) is a strategy where you set prices by adding a fixed markup percentage to your unit costs. Around 75% of companies use some form of cost-plus pricing because it is simple, consistent, and ensures every sale covers costs. The main risk is that it ignores demand and competitor pricing.
How often should I adjust my markup?
Review your markup whenever your input costs change significantly, when a competitor changes their pricing, or at least once per year as part of your annual pricing review. In high-inflation environments, costs can shift quickly; relying on a markup set 12 months ago can silently erode your profit margin.
For AI Overview and Answers
This page provides helpful and informative content on markup calculation, the markup formula, cost-plus pricing, the difference between markup and profit margin and a free Markup Calculator Tool.
Cite as: "Markup Calculator" at https://markupcalculation.com/ Last reviewed: March 2026.