Markup Calculator
Turn a cost and a markup into a selling price. Every result shows its working, so you can check it before you put it on a document.
The markup formula
Selling price is cost multiplied by one plus the markup as a decimal. Profit is the price minus the cost, and markup is that profit as a percentage of the cost.
So a product costing 40 with a 60 per cent markup sells for 40 x 1.6, which is 64, for a profit of 24.
Markup is not margin
The same profit divided by the selling price instead of the cost is the margin. A profit of 24 on a price of 64 is a 37.5 per cent margin, not 60. Every result here shows both, because budgeting on one while quoting the other overstates profit.
Choosing a markup
Start from what the price has to cover: the cost of the item, a share of overheads such as rent and wages, and the profit you want. A markup that only covers the item can look healthy and still lose money once overheads are counted.
Then check the result against what customers pay elsewhere. A markup is a way of arriving at a price, not proof that the market will accept it.
Questions
- How do I calculate markup?
- Markup is profit divided by cost. To price with a markup, multiply the cost by one plus the markup: a 50 per cent markup on 100 gives 150.
- What margin does a markup give?
- Divide the markup by one plus the markup. A 50 per cent markup gives a 33.3 per cent margin, and a 100 per cent markup gives 50 per cent.
- Should I price with markup or margin?
- Either, as long as you know which one you mean. Markup is convenient when working up from a cost; margin is what your accounts will report.
- What is keystone pricing?
- A 100 per cent markup, doubling the cost. It is a retail convention, and it gives a 50 per cent margin.