Enter a cost and a markup percentage to get the selling price, the profit it earns, and the true gross margin.
Markup is how much you add to a product cost to set its price, as a percentage of that cost. Multiply the cost by one plus the markup divided by 100. A $40 item with a 25 percent markup adds $10, giving a $50 price. That 25 percent markup is only a 20 percent margin, because margin is measured against the higher price.
Selling price
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What Is Markup?
Markup is the amount you add to what a product costs you in order to set its selling price, written as a percentage of that cost. It is the most common way to price from the bottom up, starting from cost and working toward a price.
Because markup is measured against cost, it can climb well above 100 percent. Doubling a price is a 100 percent markup, and premium goods often go much higher.
How to Calculate a Selling Price From Markup
Price = Cost x (1 + Markup / 100)Multiply the cost by one plus the markup as a decimal. A product that costs $40 with a 25% markup adds $10, giving a selling price of $50. The calculator also shows the profit in dollars and the gross margin that price produces.
How to Read Your Result
The main figure is your selling price. The profit box shows the cash you keep per unit, and the gross margin box shows that same profit measured against the price. A 25 percent markup, for example, is only a 20 percent margin.
Set the markup high enough that the resulting margin still covers overheads and leaves a net profit once wages, shipping and tax are paid.
More detail
Markup vs Margin
Markup and margin describe the same profit from two directions. Markup divides profit by cost; margin divides it by price. Since the price is larger, the margin percentage is always smaller than the markup percentage for the same sale.
If you would rather start from the margin you need and work back to a price, use the margin calculator, which reports margin, profit and markup together.
Choosing the Right Markup
A markup only works if the price it produces covers every cost, not just the product. Before you settle on a number, check the wider picture with a cash flow calculator, and use the hourly cost calculator to see what your own time adds to the true cost of each sale.
How do I convert markup to margin?
Margin equals markup divided by one plus markup. A 25 percent markup gives a 20 percent margin; a 100 percent markup gives a 50 percent margin. This tool shows both at once.
Can markup be over 100 percent?
Yes. Because markup is measured against cost, doubling the price is a 100 percent markup and it can go much higher. Margin, by contrast, can never reach 100 percent.
Should I price with markup or margin?
Either works, as long as you are consistent. Many trades quote markup because they price up from cost, while retailers track margin because they manage against the sale price.
What markup covers my costs?
Set it so the resulting margin still leaves a net profit after overheads, wages, shipping and tax. If a 20 percent margin barely covers those, a 25 percent markup is not enough.
Is my data saved?
No. The calculation runs in your browser and nothing you enter is stored.
Sources
- Markup: definition and formula (Corporate Finance Institute).
- Gross margin explained (Corporate Finance Institute).
- Managing small-business finances (U.S. Small Business Administration).
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This calculator is for general information and planning only and is not financial, tax, accounting or legal advice. Results are estimates based on the figures you enter. Confirm important decisions with a qualified professional. Spotted an error? Let us know.
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