Markup is the amount added to cost to create a selling price. The markup formula helps you understand how much profit is added above cost, either as a money amount or as a percentage. A markup calculator is useful when you know cost and want to set or check a selling price.
Use the calculator to check your own numbers, then read the guide for formulas, examples, and common mistakes.
What Is Markup?
Markup is the amount added to the cost of a product or service to create the selling price.
If a product costs 60 and sells for 90, the markup amount is 30.
Markup is useful for pricing because it starts from cost and shows how much has been added above that cost.
Markup Formula
The basic markup formula is: markup amount = selling price - cost.
The markup percentage formula is: markup percentage = markup amount ÷ cost × 100.
This means markup percentage uses cost as the base, not selling price.
Markup Example
Suppose a product costs 40 and sells for 60.
The markup amount is 60 - 40, which equals 20.
The markup percentage is 20 ÷ 40 × 100, which equals 50%.
Selling Price From Markup Formula
If you know cost and markup percentage, you can calculate selling price with this formula: selling price = cost × (1 + markup percentage ÷ 100).
For example, if cost is 80 and markup is 25%, selling price is 80 × 1.25.
The selling price is 100. For a full walkthrough, read How to Calculate Selling Price From Markup.
Markup vs Profit Margin
Markup and profit margin are related, but they are not the same calculation.
Markup compares profit with cost. Profit margin compares profit with selling price.
For the detailed comparison, read Profit Margin vs Markup.
Why Markup Percentage Can Look Higher Than Margin
Markup percentage often looks higher than profit margin because markup uses cost as the base.
For example, if cost is 60 and selling price is 100, profit is 40. The markup is 66.67%, but the profit margin is 40%.
The profit amount is the same, but the percentage changes because the base number changes.
When Markup Is Useful
Markup is useful when setting prices from known costs.
Retailers, ecommerce sellers, wholesalers, service providers, and freelancers can use markup to turn cost into a selling price.
Markup is also useful when comparing whether a product is priced high enough above its cost.
Markup and Discounts
A product may be priced with a markup, but discounts can reduce the final selling price.
If the selling price falls while cost stays the same, the real profit margin also falls.
For discount impact, read How Discounts Affect Profit Margin.
Use the Markup Calculator
Use the Markup Calculator when you know cost and selling price, or when you want to understand markup percentage.
You can also use the Profit Margin Calculator to compare the same numbers from a margin point of view.
Together, both calculators help separate cost-based pricing from revenue-based profitability.
Conclusion
Markup shows how much is added above cost to create the selling price.
The markup formula is simple, but it is important not to confuse markup with profit margin. Markup is based on cost, while margin is based on selling price.
Related guides and tools
FAQs
What is the markup formula?
Markup amount = selling price - cost.
What is the markup percentage formula?
Markup percentage = markup amount divided by cost, multiplied by 100.
Is markup the same as profit margin?
No. Markup is based on cost, while profit margin is based on selling price.