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 is measured from cost
Markup compares profit with the item's cost. A 50% markup on a $100 cost adds $50, producing a $150 selling price before taxes or other charges.
Because cost is the denominator, markup answers a different question from profit margin. Confusing the two can lead to a selling price that does not produce the margin you expected.
Markup percentage vs. margin percentage
Margin compares profit with revenue or selling price. In the $100 cost and $150 selling-price example, the markup is 50%, but the gross margin is 33.33% because the $50 profit is one-third of the $150 selling price.
Use the Margin Calculator when your target is expressed as a share of revenue rather than as a percentage of cost.
A markup calculator does not measure full business profitability
The gross profit implied by markup does not automatically account for payroll, rent, payment fees, shipping subsidies, returns, advertising, taxes, or other operating expenses. Use it as a pricing relationship, not as a complete net-profit model.
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.
How do I calculate selling price from markup?
Multiply cost by the markup rate to find the markup amount, then add it to cost. A 25% markup on $80 adds $20 and produces a $100 selling price.
Is 50% markup the same as 50% margin?
No. Markup uses cost as the denominator; margin uses selling price or revenue. A 50% markup produces a 33.33% margin when there are no other costs.
For basic pricing math. A sustainable price may also need to cover overhead, taxes, returns, fees, and other business costs.