Markup Calculator

This markup calculator helps you determine the optimal selling price for your products or services. You can calculate any of the key pricing variables: cost, markup percentage, revenue (selling price), and profit — from any two of the other values.

Understanding markup is essential for profitable pricing. While many businesses focus on profit margin, markup provides a more direct view of how much you're adding on top of your costs.

Keep reading to learn how to calculate markup and optimize your pricing strategy.

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Table of Contents

• How to calculate markup
• Markup formula
• Markup vs. margin
• Pricing strategies
• Frequently asked questions (FAQs)

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How to Calculate Markup

To calculate markup manually, follow these steps:

1. Determine your Cost Example: $40

2. Determine your Selling Price (Revenue) Example: $70

3. Calculate Profit Revenue − Cost $70 − $40 = $30

4. Divide Profit by Cost $30 ÷ $40 = 0.75

5. Convert to a Percentage 0.75 × 100 = 75% markup

This is the standard method for calculating markup. You can also use our online markup calculator for instant results.

Important: Markup is calculated based on cost, not revenue. This is what differentiates markup from margin.

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Markup Formula

The standard markup formula is:

Markup (%) = (Profit ÷ Cost) × 100

Since profit is calculated as:

Profit = Revenue − Cost

You can also express markup as:

Markup (%) = (Revenue − Cost) ÷ Cost × 100

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Revenue Formula (Using Markup)

If you know your cost and desired markup:

Revenue = Cost × (1 + Markup ÷ 100)

For example, with $100 cost and 50% markup: $100 × 1.5 = $150

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Cost Formula (Using Markup)

To calculate cost when you know revenue and markup:

Cost = Revenue ÷ (1 + Markup ÷ 100)

This is useful when working backwards from a target selling price.

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Markup vs. Margin

Although often confused, markup and margin are fundamentally different.

• Markup = Profit ÷ Cost of Goods Sold × 100
• Profit Margin = Profit ÷ Selling Price × 100

Example:

• Cost = $40
• Price = $70
• Profit = $30

Markup = 75% Margin = 42.9%

Markup is based on cost, while margin is based on revenue. A 50% markup equals a 33% margin, not 50%.

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Pricing Strategies

Cost-Plus Pricing

Add a standard markup percentage to all products. Simple but may not reflect market value.

Competitive Pricing

Base your markup on competitor prices. Ensures market competitiveness.

Value-Based Pricing

Set markup based on perceived customer value, not just cost. Often yields higher profits.

Keystone Pricing

Double your cost (100% markup). Common in retail for its simplicity.

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Frequently Asked Questions (FAQs)

What's the difference between markup and margin?

• Markup is a percentage of cost.
• Margin is a percentage of revenue.

Markup can exceed 100%, but margin cannot. A 100% markup equals a 50% margin.

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How do I calculate selling price with markup?

Multiply your cost by (1 + markup percentage as a decimal). For 60% markup on $50 cost: $50 × 1.6 = $80.

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What is a good markup percentage?

It varies by industry:

• Retail: 50-100%
• Restaurants: 200-400% (food cost method)
• Wholesale: 15-30%
• Services: 50-150%

Consider your costs, competition, and desired profit.

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Can I have negative markup?

Technically yes (selling below cost), but this creates losses. Only use strategically for promotions, clearance, or market penetration.

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How do I convert margin to markup?

Use: Markup = Margin ÷ (1 - Margin)

For 40% margin: 0.40 ÷ 0.60 = 0.667 = 66.7% markup

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How do I calculate markup in Excel?

1. Enter cost in cell A1
2. Enter revenue in cell B1
3. Profit: =B1-A1
4. Markup: =(C1/A1)*100

This gives markup as a percentage.