Markup Calculator

Markup is the percentage or amount added to the cost of a product or service to determine its selling price. If you buy something for $100 and add a 50% markup, you sell it for $150. The markup formula is: Markup % = ((Selling Price - Cost) / Cost) × 100. Its how businesses ensure they cover costs and make a profit on every sale.

Markup and margin both measure profit, but from different angles. Markup is calculated as a percentage of cost: (Profit / Cost) × 100. Margin is calculated as a percentage of selling price: (Profit / Selling Price) × 100. A 50% markup on $100 cost means selling at $150. That same $50 profit represents only a 33.3% margin because margin looks at profit relative to the final price. This is a critical distinction—confusing the two can lead to serious pricing mistakes.

To calculate markup percentage, use this formula: Markup % = ((Selling Price - Cost) / Cost) × 100. For example, if you paid $80 for a product and sell it for $120, your markup is (($120 - $80) / $80) × 100 = 50%. You can also use our markup percentage calculator above—just enter your cost and selling price, and the tool calculates it instantly.

To calculate selling price from cost and markup percentage, use this formula: Selling Price = Cost × (1 + Markup % / 100). For example, if your cost is $75 and you want a 40% markup: $75 × (1 + 0.40) = $75 × 1.40 = $105. This price markup calculator does this automatically when you select the "Cost + Markup %" mode.

A "good" markup depends heavily on your industry and business model. Grocery stores typically use 10-15% markups due to high volume and thin margins. Clothing retailers often mark up 50-100%. Restaurants mark up food 50-70% and beverages even more. Service businesses and contractors usually target 15-50% depending on competition and value provided. The key is ensuring your markup covers all costs (not just direct costs) and provides sustainable profit. Use industry benchmarks as a starting point, then adjust based on your specific situation.

To convert markup percentage to margin percentage, use this formula: Margin % = Markup % / (100 + Markup %). For example, a 50% markup converts to: 50 / (100 + 50) = 50 / 150 = 0.333 or 33.3% margin. Going the other way (margin to markup): Markup % = Margin % / (100 - Margin %). A 25% margin equals: 25 / (100 - 25) = 25 / 75 = 0.333 or 33.3% markup. This margin to markup calculator shows both values simultaneously so you always know where you stand.

A reverse markup calculator helps you work backwards from a selling price to find your markup percentage. This is useful when you know what competitors charge or what customers will pay, and need to figure out your margins. Enter your cost and the target selling price, and the calculator tells you the effective markup and margin percentages. Its essential for competitive pricing decisions.

Contractor markup typically covers materials, labor overhead, business expenses, and profit. A common approach is using a material markup calculator to add 15-25% on supplies, plus a labor burden rate that includes wages, taxes, insurance, and benefits. Total job markup might range from 20-50% depending on the trade. Plumbers, electricians, and HVAC contractors often use higher markups on service calls because of expertise and emergency availability. The key is calculating your true costs first, then applying markup to ensure profitability.

Parts markup is the percentage added to the cost of parts or materials before billing customers. Auto repair shops typically mark up parts 25-50%. Contractors often use 15-30% on materials. The markup compensates for sourcing, storage, warranty handling, and convenience. Some businesses use tiered markup—higher percentages on smaller parts, lower on expensive items. Whatever you choose, be consistent and make sure it contributes to overall profitability.

A high markup doesnt guarantee high profits because profitability depends on sales volume too. If you mark up products 200% but only sell a few, you might make less than someone with 30% markup selling hundreds. Additionally, overhead costs, marketing expenses, and operational efficiency all affect the bottom line. Some businesses with seemingly low markups (like grocery stores) are highly profitable due to massive volume and efficient operations. The goal is finding the right balance between markup, volume, and costs.

GST and VAT are typically calculated on top of your marked-up selling price, not included in your markup calculation. First, determine your selling price using your desired markup on cost. Then add the applicable tax. For example: $100 cost + 50% markup = $150 selling price. Add 10% GST = $165 final price. The tax portion goes to the government, not your profit. When comparing prices or margins, make sure youre comparing tax-exclusive numbers for accuracy.

The most common mistakes include: confusing markup with margin (a 50% markup is only 33% margin), forgetting to include all costs in your base cost before marking up, using the same markup for all products regardless of their characteristics, not adjusting markup based on market conditions, and failing to review and update pricing regularly. Many business owners also underprice by copying competitors without knowing their own costs. Always calculate your true costs first, then apply markup strategically.

Not necessarily. Many successful businesses use variable markup strategies. Lower-priced items often warrant higher markup percentages since customers are less price-sensitive on small purchases. High-ticket items might need lower markups to remain competitive. Commodity products with transparent pricing need careful markup, while unique or specialty items can command premium prices. Consider using cost-based markups as a floor, then adjust based on perceived value, competition, and customer expectations.