How to calculate markup
Compare cost and price, then test a target.
1
Enter unit cost
Include landed cost, not just the supplier invoice.
2
Enter selling price
Use the actual net price after typical discounts.
3
Check margin
Margin shows whether the price supports your profit target.
What does this tool do?
Markup is the amount added to cost to reach a selling price, expressed as a percentage of cost. It is not the same as margin, which is expressed as a percentage of price, so mixing the two leads to underpricing.
The Formula
Markup % = (Price − Cost) ÷ Cost × 100; Margin % = (Price − Cost) ÷ Price × 100Frequently Asked Questions
How do I convert markup to margin?
Margin equals markup divided by one plus markup: a 50% markup becomes 33.3% margin. In price terms, multiply cost by one plus markup to get price.
Which should I use for pricing?
Use markup to set a price from cost, then check margin to see the share of revenue kept. Margin is more useful for comparing profitability across products.