Use markup when pricing starts with cost.
Markup is a pricing method: start with an item cost, choose a percentage of that cost to add, and calculate a selling price. It is common in retail, wholesale, contracting, and resale workflows where costs are known before the customer price is set.
The result shows both the markup amount and final price. After setting a price, use Profit Margin to see what share of the selling price the gross profit represents.
Different questions need different denominators.
Markup divides profit by cost and is used to build a selling price. Profit margin divides profit by selling price and evaluates the resulting sale. ROI compares a broader gain with investment, while break-even finds how many unit contributions cover fixed costs.
Formula and calculation method.
Selling price = Cost × (1 + Markup percentage ÷ 100)Markup amount equals cost × markup percentage ÷ 100. Adding that amount to cost gives selling price. The resulting margin equals markup ÷ (100 + markup), so a 50% markup produces a 33.33% margin—not 50%.
See the business meaning, not just the math.
$48 cost with a 40% markup
Working: $48 × (1 + 0.40)
Result: $67.20 selling price and $19.20 markup amount
Interpretation: The equivalent gross margin is 28.57% because $19.20 is divided by the $67.20 selling price.
$25 cost with a 100% markup
Working: $25 × (1 + 1.00)
Result: $50 selling price and $25 markup amount
Interpretation: A 100% markup doubles cost but produces a 50% gross margin.
$200 cost with a 15% markup
Working: $200 × (1 + 0.15)
Result: $230 selling price and $30 markup amount
Interpretation: The equivalent margin is about 13.04% before other direct expenses.
Put the number in context.
A markup policy is only as useful as the cost base. If direct freight, packaging, commissions, or labor are omitted, the calculated price may not provide the expected profitability.
Markup does not guarantee a sale or a net profit. Compare the calculated price with market conditions, then review gross margin and break-even volume before making a pricing decision.
Assumptions and common mistakes.
What the calculation assumes
- The entered cost is the complete per-unit base to which markup should apply.
- Markup is a non-negative percentage of cost.
- Cost and selling price use the same selected denomination; changing it does not rescale the values with an exchange rate.
- No tax, discount, commission, or quantity pricing is added after the calculation.
Mistakes to avoid
- Entering a target profit margin as though it were the same markup percentage.
- Applying markup to an incomplete cost that excludes direct fulfillment expenses.
- Adding 100% and assuming the result has a 100% profit margin.
- Ignoring discounts that reduce the realized selling price and margin.
What unusual inputs mean.
Selling price equals cost and the markup amount is zero.
Selling price is twice cost, producing a 50% gross margin.
The mathematical selling price is zero for any percentage because markup is applied to the cost base.
What this calculation leaves out.
The calculator applies one percentage to one unit cost. It does not optimize prices, include sales tax, model discounts or demand, allocate overhead, or enforce currency-specific rounding. Confirm that the resulting price covers all relevant costs and fits the market.
Questions people ask.
How is markup calculated?
Markup amount is cost multiplied by the markup percentage. Selling price is cost plus that markup amount.
Is a 50% markup the same as a 50% margin?
No. A 50% markup produces a selling price equal to 150% of cost and an equivalent margin of 33.33%.
What markup doubles the cost?
A 100% markup adds an amount equal to cost, so the selling price is twice the original cost.
Can markup be zero?
Yes. At 0% markup, selling price equals cost and there is no gross profit before other expenses.
Should tax be included in the selling price?
Usually sales tax collected for a government is handled separately, but pricing and tax rules vary. Use the pre-tax selling price for a clean margin comparison.
How do I convert markup to margin?
Use Margin (%) = Markup (%) ÷ (100 + Markup (%)) × 100. For example, a 50% markup converts to a 33.33% margin.