Retail markup is the amount added above product cost to create the retail selling price. It helps retailers cover costs and create profit from the difference between what they pay for a product and what they sell it for.
Use the calculator to check your own numbers, then read the guide for formulas, examples, and pricing mistakes.
What Is Retail Markup?
Retail markup is the difference between product cost and retail selling price.
If a retailer buys a product for 40 and sells it for 70, the markup amount is 30.
Retail markup is commonly used by shops, ecommerce sellers, wholesalers, and product-based businesses.
Retail Markup Formula
The retail markup formula is: markup amount = retail price - product cost.
The retail markup percentage formula is: markup percentage = markup amount ÷ product cost × 100.
This means retail markup percentage is based on cost.
Retail Markup Example
Suppose a retailer buys a product for 25 and sells it for 45.
The markup amount is 45 - 25, which equals 20.
The markup percentage is 20 ÷ 25 × 100, which equals 80%.
Retail Price From Markup
If you know product cost and markup percentage, you can calculate retail price.
The formula is: retail price = cost × (1 + markup percentage ÷ 100).
For example, if cost is 50 and markup is 60%, retail price is 50 × 1.60, which equals 80.
Retail Markup vs Profit Margin
Retail markup and profit margin are related, but they are not the same.
Retail markup uses product cost as the base. Profit margin uses selling price as the base.
For the full comparison, read Profit Margin vs Markup.
Why Retail Markup Matters
Retail markup helps a seller understand whether the selling price is high enough above product cost.
It also gives room for expenses such as packaging, payment fees, returns, fulfilment, advertising, and platform fees.
A product with too little markup may leave weak profit after real costs are included.
Retail Markup and Discounts
Discounts can reduce the final selling price and reduce profit from each sale.
A product may have a planned markup, but a discount can lower the final margin.
For the discount effect, read How Discounts Affect Profit Margin.
Retail Markup and Cost-Plus Pricing
Retail markup is often part of cost-plus pricing because the retailer starts with cost and adds a percentage above it.
The Cost-Plus Pricing Formula guide explains this pricing method in more detail.
This approach is simple, but it still needs to be checked against market prices and customer demand.
Use the Calculator
Use the Markup Calculator to calculate retail markup amount and percentage.
If you want to calculate profit margin from selling price and cost, use the Profit Margin Calculator.
Both views are helpful when pricing retail products.
Conclusion
Retail markup shows how much is added above product cost to create the retail price.
The formula is simple, but the result should be checked with profit margin, discounts, and real business costs.
Related guides and tools
FAQs
What is retail markup?
Retail markup is the amount added above product cost to create the retail selling price.
What is the retail markup formula?
Retail markup amount = retail price - product cost.
Is retail markup the same as profit margin?
No. Markup is based on cost, while profit margin is based on selling price.