About the Markup Calculator
When you know your cost and want to set a selling price with a specific markup percentage, this is the calculation you need - markup is calculated on cost, not revenue, which is what makes it different from profit margin. Our Markup Calculator finds your selling price directly.
How It Works
The calculator multiplies your cost by (1 + markup percentage) to find the selling price that achieves your target markup, then shows the resulting dollar profit on the sale.
Formula & Methodology
Markup measures profit relative to what the seller paid, not what the customer pays - which is the reverse reference point from margin. Because markup is calculated on the smaller number (cost) while margin is calculated on the larger number (revenue, which includes the markup itself), the same dollar profit always produces a markup percentage that's numerically larger than the corresponding margin percentage, which is a frequent source of pricing confusion.
Step-by-Step: Calculating It By Hand
- 1Convert the target markup percentage to a decimal.
- 2Add 1 to that decimal.
- 3Multiply cost by that sum to find the selling price.
- 4Subtract cost from selling price to find the resulting dollar profit.
Examples
40% markup
A $90 cost with a 40% markup produces a $126 selling price and a $36 profit.
Markup vs. margin on the result
That same $126 price and $90 cost actually represents a 28.6% profit margin - notably lower than the 40% markup percentage, since margin and markup use different denominators.
Advantages
- Directly solves for selling price from cost and a target markup percentage
- Fast way to price products consistently across a catalog
- Shows the resulting dollar profit alongside the price
- Useful for retail, wholesale, and service-based pricing
Common Mistakes
- Assuming a given markup percentage equals the same profit margin percentage - they're always different for any markup above 0%
- Not accounting for additional costs (shipping, payment processing fees) beyond the base product cost
- Setting inconsistent markups across a product line without checking the resulting margins make business sense
- Confusing markup with margin when comparing pricing strategies against competitors
Edge Cases to Watch For
- A markup percentage always converts to a lower margin percentage on the same sale - a 100% markup, for example, always equals exactly a 50% margin, never the other way around.
- Additional costs beyond the base product cost (shipping, payment processing, packaging) should be included in 'cost' for the markup to reflect true profitability.
- Setting a uniform markup percentage across a product line can produce very different margins if unit costs vary significantly across products.
- Competitor pricing sometimes constrains the achievable markup regardless of what would otherwise be a comfortable target margin.
Common Use Cases
- Setting a selling price from a known product cost and target markup
- Pricing consistently across a product catalog
- Comparing markup strategies across different products
- Understanding how markup translates into actual profit margin