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Markup Calculator: Price From Cost and Markup %
Enter what an item costs you and the markup percentage you want to add. You get the selling price, the profit and the gross margin that this markup really delivers.
How markup pricing works
Cost-plus pricing starts with what you paid or spent per item and adds a percentage of that cost. The calculation is:
Selling price = cost × (1 + markup ÷ 100)
and the profit is cost × markup ÷ 100. With a cost of 45 and a markup of 60%, the profit is 27 and the price is 72. Over 20 items that is 540 of profit on 1,440 of revenue.
The margin that a markup implies
People often compare their result with a target margin, so the calculator also shows the margin. It is markup ÷ (1 + markup) with the markup as a decimal. Here 60% becomes 0.6 ÷ 1.6 = 37.5%. A shop that needs a 40% margin cannot reach it with a 60% markup and would need about 66.7%.
The mathematics are the same whatever the currency, but the margin you need depends on your overheads, which the cost figure should include if you want them covered. If you want to start from a margin target, use the margin calculator.
Practical notes and limits
- Which cost? Use landed cost: purchase price plus freight, duty and handling. A markup on the supplier price alone leaves those costs uncovered.
- Market price still rules. The calculated price is a starting point. Competitors, demand and perceived value may push the real price up or down.
- Sales tax is separate. The result is a pre-tax price. Add any sales tax or VAT after you have set the price.
- Discounts erode markup. A 20% discount on a 25% markup leaves no profit at all, because the discounted price equals the cost.
This tool does not know your overheads, returns or payment fees. It is a pricing estimate, not financial advice.
A short worked comparison
Two sellers each pay 100 for an item. Seller A adds a 30% markup and charges 130, earning 30 of profit, which is a 23.1% margin. Seller B wants a 30% margin and so divides the cost by 0.70, charging 142.86 for 42.86 of profit, which is a markup of 42.9%. The same words, "30%", produce prices that differ by almost 13. Always state whether a percentage is on cost or on price before agreeing a price list, a supplier contract or a commission scheme.
When a price list covers many items, apply a consistent rule and round to the price points your customers expect, for example ending in .99 or .95. Rounding up slightly raises the real margin and rounding down lowers it, so recheck the implied margin after rounding.
Worked example
A wholesaler buys an item for 45, adds a 60% markup, and sells 20 of them.
Inputs
| Cost per item | 45 |
|---|---|
| Markup on cost | 60 % |
| Quantity | 20 |
Result
A markup of 60.00% on a cost of 45.00 gives a margin of 37.50%.
| Cost per item | 45.00 |
|---|---|
| Profit per item | 27.00 |
| Selling price | 72.00 |
| Implied gross margin | 37.50% |
| Total cost for 20 item(s) | 900.00 |
| Total revenue | 1,440.00 |
| Total profit | 540.00 |
- Markup is profit divided by cost. Margin is profit divided by price, so it is always lower than the markup.
Financial disclaimer: Results are estimates for planning and education. They are not financial, tax or legal advice. Fees, taxes, rates and rules vary by lender, product and country, so confirm figures with your provider or a qualified adviser before making decisions.
Frequently asked questions
How do I calculate a selling price from a markup?
Multiply the cost by one plus the markup as a decimal. A cost of 80 with a 25% markup is 80 × 1.25 = 100.
What is a 50% markup in margin terms?
A 50% markup gives a gross margin of one third, or 33.3%, because the profit is half the cost but only a third of the price.
Is markup always higher than margin?
For any positive profit, yes. Both use the same profit, but markup divides by the smaller number, the cost.
Can markup be over 100%?
Yes. A markup over 100% means the price is more than double the cost. The margin still stays below 100%.
Should I include overheads in the cost?
If you want the markup to cover them, add an allocation of overheads to the cost per item first. Otherwise the markup must be large enough to pay for them as well as to leave a profit.
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References and sources
- Horngren, Datar and Rajan, Cost Accounting: a Managerial Emphasis, discussion of cost-plus pricing.