Calculate Product Markup
Calculate selling price based on cost and desired markup percentage.
Formula
Markup (%) = ((Selling Price − Cost) / Cost) × 100 Selling Price = Cost × (1 + Markup% / 100)
How to Calculate
Markup is the percentage added to the cost of a product to determine its selling price. To calculate markup percentage, subtract the cost from the selling price, divide the result by the cost, and multiply by 100. To calculate the selling price from a desired markup, multiply the cost by (1 + markup percentage / 100).
Markup and margin are related but different. A 50% markup on a $10 item gives a $15 selling price and a 33.3% margin. Many business owners confuse the two, leading to pricing errors that erode profitability. Always clarify which metric you are using when setting prices.
Standard markups vary by industry. Grocery stores might use 10–30% markups, clothing retailers 50–100%, and restaurants 200–400% on beverages. Your markup must cover not just the product cost but also your share of overhead, marketing, and desired profit.
Worked Example
A retailer buys a handbag from a wholesaler for $40 and wants a 75% markup.
Selling Price = $40 × (1 + 75/100) = $40 × 1.75 = $70 Markup Amount = $70 − $40 = $30
To verify: Markup % = ($30 / $40) × 100 = 75% ✓ The profit margin on this sale is ($30 / $70) × 100 = 42.9%
Note the difference: 75% markup produces a 42.9% profit margin.
Why It Matters
Setting the right markup is a balancing act between profitability and competitiveness. Too-low markups lead to thin margins that cannot sustain your business. Too-high markups price you out of the market. Understanding markup helps you make informed pricing decisions, respond to cost increases, and maintain consistent profitability across your product catalog.
Practical Tips
- ✓Use keystone pricing (100% markup / 50% margin) as a starting baseline for retail products.
- ✓Apply different markups to different product categories based on competition and perceived value.
- ✓Always convert between markup and margin to understand both perspectives on your pricing.
- ✓Revisit markups quarterly—supplier cost changes can silently erode your profitability.
Frequently Asked Questions
What is the difference between markup and margin?
What is a typical retail markup?
Should I use the same markup for all products?
Skip the Manual Calculations
FiscalInsights automates your financial calculations, tracks your metrics in real time, and gives you actionable insights to grow your business.
Start Free Trial