How markup is worked out
Markup is added to the cost: price is the cost times one plus the markup. Going the other way, markup is the profit divided by the cost.
Price = cost × (1 + markup ÷ 100) Markup % = (price − cost) ÷ cost × 100
Profit = price − cost. Nothing is rounded until the result is shown.
Example: price from cost and markup
Cost $40.00, markup 50%.
- Price: $40.00 × (1 + 50 ÷ 100) = $60.00
- Profit: $60.00 − $40.00 = $20.00
- As a margin, that profit is $20.00 ÷ $60.00 = 33.33%.
Example: markup from price and cost
You sell at $60.00 an item that costs $45.00.
- Profit: $60.00 − $45.00 = $15.00
- Markup: $15.00 ÷ $45.00 × 100 = 33.33%
Questions
What is markup?
The amount added to the cost, shown as a percent of the cost. A 50% markup on a $40 item adds $20, so the price is $60.
How is markup different from margin?
Markup is profit divided by cost. Margin is profit divided by price. A 50% markup is a 33.3% margin. The margin vs markup calculator converts between them.
Can markup be over 100%?
Yes. If the price is more than double the cost, the profit is more than the cost, so the markup is above 100%. Margin can never reach 100%.
Why is the cost not allowed to be zero in price-and-cost mode?
Markup divides by the cost, and dividing by zero has no answer. With a cost of zero the markup is undefined.
Does this include tax, shipping or fees?
No. It uses exactly the cost and price you enter. Add any costs you want counted into the cost first.