Markup Calculator Formula

Understand the math behind the markup calculator. Each variable explained with a worked example.

Use the Markup Calculator

Formulas Used

Markup Percentage

markup_pct = cost > 0 ? ((selling_price - cost) / cost) * 100 : 0

Profit Margin

margin_pct = selling_price > 0 ? ((selling_price - cost) / selling_price) * 100 : 0

Profit

profit = selling_price - cost

Variables

VariableDescriptionDefault
costCost Price(USD)50
selling_priceSelling Price(USD)75

How It Works

How to Calculate Markup

Markup is the percentage added to the cost price to determine the selling price.

Formula

Markup % = [(Selling Price - Cost) / Cost] x 100

Markup vs. Margin

  • Markup is based on cost: how much you add to your cost
  • Margin is based on selling price: what percentage of the sale is profit

    • Worked Example

    You buy a product for $50 and sell it for $75.

    cost = 50selling_price = 75
    1. 01Profit = $75 - $50 = $25
    2. 02Markup = ($25 / $50) x 100 = 50%
    3. 03Margin = ($25 / $75) x 100 = 33.33%

    When to Use This Formula

    • A retailer receiving wholesale goods at a known cost and needing to add a percentage to set the selling price.
    • A contractor calculating a bid price by applying a standard markup to material and labor costs.
    • Comparing markup percentages across suppliers to understand which vendor relationship yields the best pricing flexibility.
    • Converting between markup and margin when communicating with teams that use different conventions — sales often thinks in margin while purchasing thinks in markup.

    Common Mistakes to Avoid

    • Treating markup and margin as interchangeable — a 100% markup means you doubled the cost, but the margin on that sale is only 50%.
    • Applying markup to the selling price instead of the cost — markup percentage is always calculated on cost, not on the final price.
    • Forgetting to include all costs in the base — if you markup only material cost but forget labor and shipping, your actual margin will be much lower than expected.
    • Using a single markup rate for all products regardless of volume or competition, which can make high-competition items uncompetitive and niche items undervalued.

    Frequently Asked Questions

    What is the difference between markup and margin?

    Markup is calculated as a percentage of cost, while margin is calculated as a percentage of selling price. A 50% markup equals a 33.33% margin. Markup is always a larger percentage than margin for the same transaction.

    How do I calculate selling price from markup?

    Selling Price = Cost x (1 + Markup%/100). For example, $50 cost with 50% markup: $50 x 1.50 = $75.

    What markup percentage should I use?

    Typical markup varies by industry. Retail clothing: 100-300%. Electronics: 10-30%. Restaurants (food cost): 200-400%. Manufacturing: 30-50%. Construction materials: 20-40%. The right markup ensures you cover costs and overhead while remaining competitive.

    How do I convert markup to margin?

    Margin = Markup / (1 + Markup). For example, a 50% markup (0.50) converts to a 0.50 / 1.50 = 33.3% margin. Conversely, Markup = Margin / (1 - Margin): a 33.3% margin converts to 0.333 / 0.667 = 50% markup.

    Learn More

    Guide

    How to Calculate Profit Margin

    Learn how to calculate gross, operating, and net profit margins step by step. Understand what healthy margins look like across industries and how to improve yours.

    Ready to run the numbers?

    Open Markup Calculator