Markup percentage from cost and price, or price from a markup.
▸ More about
Uses of markup percentage
- Pricing a product as cost plus a fixed markup
- Checking the markup a supplier or competitor applies
- Converting a target margin into the markup to enter in a POS
- Estimating profit before setting a retail price
markup percentage pitfalls
- Confusing markup (over cost) with margin (over price)
- Entering a margin target into a markup field, which inflates the price
markup percentage questions (5)
What is the markup formula?
Markup percentage is profit divided by cost, times 100. If an item costs $60 and sells for $100, the profit is $40 and the markup is 40 / 60 = 66.7%. The calculator does this for you and also shows the resulting margin.
How is markup different from margin?
Both describe profit, but against different bases. Markup is profit as a percentage of the cost; margin is profit as a percentage of the selling price. For the $60 → $100 example, markup is 66.7% but margin is 40%. Markup is always the larger number.
How do I set a price for a target markup?
Switch the calculator to "Selling price from target markup", enter your cost and the markup you want, and it returns the price. The formula is price = cost × (1 + markup ÷ 100), so a $60 cost at 50% markup gives $90.
Why is my markup higher than my margin?
Because markup is measured against the smaller number (cost) and margin against the larger number (price). The same dollar of profit is a bigger fraction of cost than of price, so the markup percentage is always higher than the margin percentage.
What does a 100% markup mean?
A 100% markup means you sell for double the cost: a $60 item priced at $120. Note that doubling the price is only a 50% margin, not 100%, another reminder that markup and margin are not interchangeable.