Calculator Wizard
Markup Calculator

What Is Markup?

Markup is the percentage added to the cost of an item to determine its selling price. If something costs you $50 to produce or buy, and you apply a 40% markup, you're adding 40% of that cost on top to arrive at your selling price — in this case, $70.

The Formula

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

Profit is simply the difference between the two:

Profit = Selling Price − Cost

Worked Example

Example: A product that costs $50 with a 40% markup

Step 1: Convert markup to decimal → 40 ÷ 100 = 0.40
Step 2: Selling Price = $50 × (1 + 0.40) = $50 × 1.40 = $70
Step 3: Profit = $70 − $50 = $20

Markup vs. Margin: A Common Mix-Up

Markup and profit margin sound like they should be the same thing, since they're both about profit as a percentage — but they're calculated from different bases, and mixing them up can lead to pricing mistakes.

MarkupMargin
Formula baseCost priceSelling price
Formula(Profit ÷ Cost) × 100(Profit ÷ Selling Price) × 100
On the $50→$70 example($20 ÷ $50) × 100 = 40%($20 ÷ $70) × 100 ≈ 28.6%

Notice the same $20 profit produces a 40% markup but only a 28.6% margin — because markup is calculated against the smaller cost figure, while margin is calculated against the larger selling price. This is a genuinely common source of pricing errors: setting a "40% margin" using the markup formula by mistake results in a lower actual profit margin than intended.

Common mistake to avoid: if you want a 40% margin, don't just set your markup to 40% — you need a markup higher than 40% to actually achieve it, since margin is measured against the larger selling price, not the cost. Using your target margin percentage directly as a markup percentage will always leave you with a lower margin than you intended.

Working the other direction — a price cut instead?

Try the Discount Calculator

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