Markup Calculator: A Practical Guide
Use the Markup Calculator to measure how much a selling price exceeds cost, expressed as a percentage of cost. It calculates an achieved markup from two known amounts; it does not ask for a target markup and generate a selling price.
How to Use Markup Calculator
- Enter Cost price.
- Enter Selling price.
- Select Calculate markup.
- Review profit and the percentage relative to cost.
Markup Uses the Cost Base
Markup = (selling price − cost) ÷ cost × 100. Cost must be positive. A selling price below cost gives a negative markup.
To set a price manually from a desired markup, use cost × (1 + markup ÷ 100). A 30% markup is not a 30% margin because margin divides profit by the selling price.
Worked Example
A product costing 400 and selling for 500 earns 100 before any omitted expenses. Markup is 25%, while margin is 20%.
If a 10% discount reduces that selling price to 450, profit becomes 50 and markup falls to 12.5%.
Calculate the revenue-based percentage: use the Profit Margin Calculator.
Check a reduced selling price: use the Discount Calculator.
Checks and Common Mistakes
- Keep purchase cost and selling price on the same tax basis.
- Do not use zero cost.
- Packaging, delivery and other omitted costs change real profitability.
- A high markup alone does not show sales volume or net profit.
Frequently Asked Questions
Can markup exceed 100%?
Yes. Selling for more than twice cost creates markup above 100%; this does not imply margin above 100%.
Can I enter a target percentage?
The current fields take cost and selling price. Use the formula in this guide to calculate a target selling price separately.
Why does margin show a smaller number?
For a profitable sale, revenue exceeds cost. Dividing the same profit by the larger revenue base gives a smaller percentage.
Related Tools for the Next Step
- Profit Margin Calculator: Calculate the revenue-based percentage.
- Discount Calculator: Check a reduced selling price.
- Break Even Calculator: Include fixed costs in a volume model.
- Percentage Calculator: Calculate a target markup amount.
Reference
Further reading: U.S. Small Business Administration: break-even analysis.