Markup Formula
Markup is profit as a percentage of what the item cost you. The two forms you need:
Selling price = cost x (1 + markup / 100)Markup % = (selling price - cost) / cost x 100
Worked example: cost to price
Cost: $50.00, markup: 100%Price = 50.00 x (1 + 1.00) = $100.00Profit = 100.00 - 50.00 = $50.00
A 100% markup on $50 gives a $100 price and a 50% margin.
Worked example: the markup you already earn
Cost: £8.40, selling price: £12.60 ex VATMarkup = (12.60 - 8.40) / 8.40 x 100 = 50%
Selling an £8.40 item at £12.60 is a 50% markup (a 33.3% margin).
Markup vs Margin
Markup is profit over cost. Margin is profit over the selling price. Same money, different denominator. A product that costs $50 and sells for $100 earns $50: that is a 100% markup but only a 50% margin. Markup is always the bigger number, and it has no ceiling, while margin can never reach 100%.
Price from cost with markup, because it tells you what to multiply the cost by. Judge profitability with margin, because accounts and most sales reports use revenue as the base. The trouble starts when a target set as one is applied as the other: a buyer asked to hold a 40% margin who adds 40% to cost ends up at 28.6%, more than 11 points short on every line. Convert with these two formulas, using decimals:
margin = markup / (1 + markup)markup = margin / (1 - margin)
Markup to margin conversion table
| Markup | Gross margin | Price multiplier |
|---|---|---|
| 10% | 9.1% | 1.1x cost |
| 20% | 16.7% | 1.2x cost |
| 25% | 20% | 1.25x cost |
| 30% | 23.1% | 1.3x cost |
| 40% | 28.6% | 1.4x cost |
| 50% | 33.3% | 1.5x cost |
| 60% | 37.5% | 1.6x cost |
| 75% | 42.9% | 1.75x cost |
| 100% | 50% | 2x cost |
| 120% | 54.5% | 2.2x cost |
| 150% | 60% | 2.5x cost |
| 200% | 66.7% | 3x cost |
| 250% | 71.4% | 3.5x cost |
| 300% | 75% | 4x cost |
Margin to markup conversion table
Working back from a target margin? This is the markup to add to cost. The 50% row is keystone pricing: doubling cost gives a 50% margin.
| Gross margin | Markup needed | Price multiplier |
|---|---|---|
| 5% | 5.3% | 1.053x cost |
| 10% | 11.1% | 1.111x cost |
| 15% | 17.6% | 1.176x cost |
| 20% | 25% | 1.25x cost |
| 25% | 33.3% | 1.333x cost |
| 30% | 42.9% | 1.429x cost |
| 33.33% | 50% | 1.5x cost |
| 35% | 53.8% | 1.538x cost |
| 40% | 66.7% | 1.667x cost |
| 45% | 81.8% | 1.818x cost |
| 50% | 100% | 2x cost |
| 55% | 122.2% | 2.222x cost |
| 60% | 150% | 2.5x cost |
| 65% | 185.7% | 2.857x cost |
| 70% | 233.3% | 3.333x cost |
| 75% | 300% | 4x cost |
| 80% | 400% | 5x cost |
Common Markups by Industry
These are starting points, not rules. Businesses adjust by category, competition and how fast stock turns:
| Industry | Typical markup |
|---|---|
| Grocery | 10 to 35%, by category |
| Wholesale distribution | 15 to 50%, by line and volume |
| Apparel | 100 to 150% |
| Gift and boutique retail | Keystone (100%) to 150% |
| Restaurants and bars | 200 to 400% on food and drink cost |
Low-markup trades like grocery live on volume and stock turns. High-markup trades like restaurants need the spread to cover labour, waste and rent, so the food cost markup is not the profit.
Start From the Right Cost
Markup is only as good as the cost it is applied to. To include freight and duty first, use the landed cost calculator. To turn a cost into a shelf price with .99 endings and a check against MSRP, use the retail price calculator. For gross and net profit margin on what you already sell, see the margin calculator.