How to use the markup calculator
Enter the product or service cost and the markup percentage. Markup is measured relative to cost, not selling price.
Markup formula
Markup and margin use different denominators. A 50% markup on cost does not equal a 50% gross margin on selling price.
Example: Ravi sets a selling price
Ravi buys an item for $50 and applies a 40% markup on cost. The markup amount is $20, producing a selling price of $70.
The $20 difference is gross profit before overhead and other expenses. It represents about 28.57% of the selling price, so a 40% markup is not a 40% gross margin.
Markup uses cost as its starting point
For an item that costs $60, a 25% markup adds $15 and sets the selling price at $75. The markup percentage is calculated on cost.
Margin uses selling price as the denominator. The same $15 profit is a 20% margin on $75 of revenue; use the Margin Calculator to compare them.
Find markup from a target selling price
To work backward, subtract cost from selling price, divide the difference by cost and multiply by 100. A product that costs $40 and sells for $60 has a $20 gross profit and a 50% markup.
The same sale has a 33.33% gross margin because margin divides the $20 profit by the $60 selling price. Use the Margin Calculator when the percentage you need is based on sales revenue.
Assumptions and limitations
What the estimate assumes
Overhead, taxes, payment fees, discounts, and other operating costs are not included unless you include them in cost.
Markup Calculator FAQs
What is markup?
Markup is the profit amount expressed as a percentage of cost.
Is markup the same as margin?
No. Markup divides profit by cost, while margin divides profit by selling price.
How do I get selling price from markup?
Multiply cost by one plus the markup rate.
Can markup exceed 100%?
Yes. A markup above 100% means profit per unit exceeds the entered cost.
For basic pricing math. A sustainable price may also need to cover overhead, taxes, returns, fees, and other business costs.