About Markup Calculator
Calculate your selling price from cost and markup percentage instantly. See profit per unit, revenue, and how markup compares to margin. Free for any business.
How to use
- Enter your product or service cost — the total amount you spend to acquire, produce, or deliver one unit. Include all direct costs: wholesale price, materials, direct labor, shipping to you, and any per-unit fees. A product that costs $8 wholesale plus $2 shipping has a true cost of $10.
- Enter your desired markup percentage. Markup is the percentage added on top of your cost to arrive at the selling price. A 50% markup on a $10 cost means adding $5, for a selling price of $15. Common markups vary by industry: retail 50-100%, restaurants 200-300%, professional services 100-200%.
- View the calculated selling price, dollar profit per unit, and the equivalent profit margin percentage. Understanding both markup and margin prevents pricing mistakes — a 100% markup equals a 50% margin, and many business owners confuse the two, leading to underpricing.
- Use the reverse calculator: enter a target selling price to find the implied markup and margin on your cost. This is useful when competitive pricing forces a specific price point and you need to evaluate whether the resulting markup covers your overhead and profit targets.
- Compare markups across your product line to identify your most and least profitable items. A product with a 200% markup generating $20 profit per unit may be less profitable overall than one with 50% markup generating $5 per unit if the lower-markup product sells 10x more volume.
- Factor in all indirect costs (rent, salaries, marketing, insurance) when evaluating whether your markup is sufficient. A 100% markup on products sounds healthy, but if overhead consumes 40% of revenue, your effective net margin is only 10%.
Frequently asked questions
What is the difference between markup and margin?
Markup is the percentage added to cost: $10 cost with 50% markup = $15 selling price. Margin is profit as a percentage of selling price: that same $5 profit on a $15 sale is a 33.3% margin. They always describe the same dollar profit differently. Markup is always a larger number than margin for the same transaction. The conversion: Margin = Markup / (1 + Markup). Common pairs: 25% markup = 20% margin, 50% markup = 33.3% margin, 100% markup = 50% margin. Suppliers typically quote in markup; financial reports use margin. Use our
Profit Margin Calculator to analyze overall business profitability once you have your markup set. Confusing the two leads to underpricing.
How do I calculate markup percentage?
Markup = (Selling Price - Cost) / Cost x 100. If an item costs $12 and sells for $20, the markup is ($20 - $12) / $12 x 100 = 66.7%. To find the selling price from a desired markup: Selling Price = Cost x (1 + Markup/100). For a $12 item with 75% markup: $12 x 1.75 = $21 selling price. To find what markup you need for a target dollar profit: Markup = Target Profit / Cost x 100. If you need $8 profit on a $12 cost: $8 / $12 x 100 = 66.7% markup.
What is a good markup for small businesses?
Markup varies dramatically by industry: grocery retail averages 25-50%, clothing retail 100-200%, restaurants mark up food 200-300% and drinks 400-600%, electronics 10-30%, jewelry 100-300%, professional services 100-250%. The right markup depends on your volume, overhead, and competition. High-volume, low-overhead businesses can profit with smaller markups. Businesses with high fixed costs (retail storefronts, restaurants) need higher markups to cover rent and labor. Online businesses often operate with lower markups due to reduced overhead but must factor in marketing and shipping costs.
Should I price based on markup or margin?
Use cost-plus markup for initial pricing: start with your cost, add your required margin as a markup, and arrive at a price. Then validate against the market — if competitors charge less, you may need to reduce costs or accept a lower markup. Use margin for analysis and reporting: when evaluating business health, margin tells you what percentage of each revenue dollar is profit. Most accountants and investors discuss margin, while purchasing and operations teams think in markup. Master both languages to communicate effectively across business functions.
Does markup include tax?
No, markup should be calculated on the pre-tax cost and selling price. Sales tax (HST/GST in Canada) is collected on behalf of the government and is not part of your revenue or cost structure. A product with a $10 cost, 100% markup ($20 selling price), and 13% HST in Ontario charges the customer $22.60 total. Your markup is calculated on the $10 cost and $20 revenue, not on the tax-inclusive amounts. Use the
Sales Tax Calculator to verify the correct tax rate for your province when building your pricing. The HST collected is remitted to the CRA and should never be treated as revenue or profit.
How do I handle different markups for different products?
Most businesses use a tiered markup strategy: higher markups on exclusive, unique, or high-demand items where customers have fewer alternatives, and lower markups on commodity products where price competition is intense. A retailer might markup specialty items 150%, regular stock 80%, and loss leaders 10-20%. Track your average markup across all products (weighted by sales volume) to ensure your blended margin covers total overhead and generates adequate profit. Review markup levels quarterly and adjust based on competitive pricing, demand, and cost changes.
What is the relationship between markup, margin, and profit?
Markup determines your selling price. Margin determines what percentage of revenue becomes gross profit. Net profit depends on gross profit minus all overhead expenses. Example: $10 cost, 100% markup = $20 selling price. Gross margin = 50% ($10 profit on $20 sale). If your monthly overhead is $8,000 and you sell 1,000 units, gross profit is $10,000, and net profit is $2,000 (10% net margin). Increasing markup from 100% to 120% raises gross profit to $12,000 and net profit to $4,000 — doubling net profit with just a 10% price increase from $20 to $22.
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