Calculate selling price, profit, and gross margin from cost and markup percentage. Our free markup calculator helps retailers, wholesalers, and service businesses set profitable prices. Also converts between markup and margin.

What is Markup?

Markup is the amount added to the cost price of goods to cover overhead and profit. It’s expressed as a percentage of the cost and is a fundamental pricing strategy used by businesses worldwide to ensure profitability.

Markup Formula

The basic markup formula is:

Markup % = [(Selling Price - Cost) / Cost] × 100

Or when calculating selling price:

Selling Price = Cost × (1 + Markup % / 100)

Markup vs Margin: Understanding the Difference

One of the most common confusions in business pricing is the difference between markup and margin. While both measure profitability, they use different bases for calculation:

Markup is based on cost: (Profit / Cost) × 100
Margin is based on selling price: (Profit / Selling Price) × 100

Quick Conversion Reference

Markup %	Margin %
25%	20%
50%	33.3%
100%	50%
150%	60%
200%	66.7%

How to Calculate Markup: Step-by-Step

Determine Your Cost: Include all direct costs (materials, labor, shipping)
Set Your Markup Percentage: Based on industry standards and business goals
Calculate Selling Price: Cost × (1 + Markup % / 100)
Verify Profitability: Ensure the markup covers overhead and desired profit

Example Calculation

If your product costs $50 and you want a 60% markup:

Markup amount = $50 × 0.60 = $30
Selling price = $50 + $30 = $80
Gross profit = $30
Gross margin = $30 / $80 = 37.5%

Industry-Specific Markup Guidelines

Different industries have varying standard markup percentages based on factors like competition, overhead costs, and market demand:

Retail Markups

Clothing & Apparel: 50-100% (keystone pricing)
Electronics: 20-50%
Furniture: 100-200%
Jewelry: 50-200%
Grocery: 15-35%

Service Industry Markups

Restaurants: 200-400% on food costs
Contractors: 20-50% on materials
Consultants: 50-150% on direct costs
Auto Repair: 50-100% on parts

Wholesale Markups

Distributors: 15-30%
Importers: 30-50%
Manufacturers: 25-100%

When to Use Cost-Plus Pricing

Markup-based (cost-plus) pricing works best when:

You have stable, predictable costs
Competition is limited or you offer unique value
Customers accept cost-based pricing (B2B, government contracts)
You need simple, consistent pricing across products
Industry standards use markup-based pricing

Common Markup Mistakes to Avoid

Ignoring Overhead Costs: Markup should cover more than just direct costs
Not Considering Competition: High markups may price you out of the market
Confusing Markup with Margin: Using the wrong calculation can hurt profitability
One-Size-Fits-All Approach: Different products may need different markups
Forgetting Volume Discounts: Bulk orders often require adjusted markups

Optimizing Your Markup Strategy

Consider These Factors:

Market Positioning: Premium brands can sustain higher markups
Competition: Research competitor pricing and value propositions
Customer Perception: Price points affect brand perception
Volume Goals: Lower markups might drive higher volume
Seasonality: Adjust markups for seasonal demand

Advanced Pricing Strategies:

Keystone Pricing: Double the cost (100% markup)
Psychological Pricing: Use charm prices ($9.99 vs $10)
Bundle Pricing: Combine products for perceived value
Dynamic Pricing: Adjust markups based on demand

Frequently Asked Questions

Q: What’s a good markup percentage?

A: It varies by industry, but 50-100% is common for retail. Service businesses often use 20-50% on materials plus labor charges.

Q: How do I convert markup to margin?

A: Use this formula: Margin % = (Markup % / (100 + Markup %)) × 100

Q: Should I use markup or margin for pricing?

A: Markup is easier for cost-based pricing, while margin is better for analyzing profitability. Many businesses track both.

Q: Can markup be over 100%?

A: Yes, markup can exceed 100%. A 100% markup means you’re doubling your cost, which results in a 50% profit margin.

Q: How do I calculate markup from selling price?

A: Markup % = [(Selling Price - Cost) / Cost] × 100

Q: What’s the difference between gross and net markup?

A: Gross markup is based on direct costs only. Net markup factors in all expenses including overhead.

Start Calculating Your Markup

Use our free markup calculator above to instantly determine your selling price and profit margins. Whether you’re a retailer, wholesaler, or service provider, accurate markup calculations are essential for profitable pricing decisions.

Markup Calculator

Markup Calculation Summary