What Is Markup?
Markup is the amount a business adds to cost when setting a selling price. A 25% markup means adding 25 cents for every dollar of cost. This calculator turns your chosen percentage into a profit amount, selling price, and corresponding profit margin.
Choose a cost definition that fits your decision. A product purchase cost may leave out shipping, payment fees, and overhead. Your displayed profit covers only the costs you actually include.
Markup Formula
Markup Rate = Markup Percentage / 100
Profit = Cost × Markup Rate
Selling Price = Cost + Profit
Profit Margin = (Profit / Selling Price) × 100
Convert the percentage to a decimal before multiplying: 25% becomes 0.25. To find the markup on an existing price, use ((Selling Price − Cost) / Cost) × 100, provided cost is greater than zero.
How To Calculate Markup
- Establish your cost. Use a per-unit amount or a consistent order total.
- Choose a markup percentage. Enter 25 for 25%, not 0.25.
- Find the added amount. Multiply cost by the markup percentage divided by 100.
- Set the selling price. Add that profit amount to cost.
- Review the margin. Divide profit by selling price and multiply by 100.
Review any excluded expenses before using the result as a final price. Results display two decimal places, while calculations use unrounded input values.
Markup vs Margin Difference
Markup measures profit against cost; margin measures profit against selling price. The denominators are different, so a 25% markup is not a 25% margin.
| Measure | Markup | Margin |
|---|---|---|
| Base amount | Cost: 100 | Selling price: 125 |
| Calculation | 25 / 100 × 100 | 25 / 125 × 100 |
| Result | 25.00% | 20.00% |
For a positive cost, a 100% markup doubles the cost and produces a 50% margin. To calculate margin from actual revenue and cost instead, use the Profit Margin Calculator.
Business Example
Suppose a retailer purchases an item for $80 and chooses a 50% markup. These figures are illustrative.
- Markup rate = 50 / 100 = 0.50
- Profit amount = $80 × 0.50 = $40
- Selling price = $80 + $40 = $120
- Profit margin = ($40 / $120) × 100 = 33.33%
The $40 is the difference between selling price and the entered cost. Expenses outside that $80 cost still reduce the amount the retailer ultimately keeps.
Common Mistakes
- Entering a decimal instead of a percentage. Enter 50 for 50%; 0.50 means 0.50% in this tool.
- Using markup as a margin target. A 50% markup produces a 33.33% margin for a positive cost.
- Omitting relevant expenses. Include the cost components appropriate to the profit measure you want.
- Mixing per-unit and total amounts. A per-unit cost produces a per-unit price, not a whole-order total.
- Rounding intermediate values. Use original cost figures and round the final price according to your pricing policy.
- Applying markup to zero cost. A percentage of zero is zero. This method cannot produce a positive price from a zero cost.
Frequently Asked Questions
What is markup?
Markup is the amount added to cost to set a selling price. Markup percentage expresses that added amount as a percentage of cost.
How do I enter a markup percentage?
Enter 25 for a 25% markup. The calculator divides your percentage by 100 before multiplying it by cost. Entering 0.25 means a 0.25% markup.
What is the difference between markup and margin?
Markup compares profit with cost. Margin compares profit with selling price. A $100 cost with a 25% markup produces $25 profit, a $125 selling price, and a 20% margin.
Can markup exceed 100%?
Yes. A 150% markup on a $100 cost adds $150, giving a $250 selling price and a 60% margin. A markup above 100% does not mean the profit margin exceeds 100%.
What happens with zero cost?
A zero cost produces zero profit and a zero selling price for any finite markup entered. Profit margin is undefined because selling price is zero, so the calculator displays N/A. A markup percentage alone cannot set a positive price from zero cost.
What happens with a zero markup?
For a positive cost, zero markup makes selling price equal to cost. Profit and profit margin are both zero. If cost is also zero, margin is undefined.
Does profit amount mean net profit?
It is the selling price minus the cost you enter. If that cost excludes overhead, shipping, fees, or other expenses, the displayed profit does not account for them and should not be treated as net profit.
Can I use any currency?
Yes. Enter cost in your chosen currency. Profit and selling price use that same currency; percentages are currency-independent. This calculator does not convert currencies or add a currency symbol.
Can I enter negative markup?
This tool accepts zero or positive markup percentages. It is intended for pricing above or at cost. It does not calculate markdowns or pricing below cost.
Are my inputs stored or sent to a server?
Calculations run in your browser. The calculator does not send inputs to a server or save them in a database or browser storage. Reset clears the form.