Markup Calculator

The **Markup Calculator** is an essential tool for any business owner, retailer, or entrepreneur. It helps you quickly determine the **selling price** of a product, your required **markup percentage**, and the **gross profit** earned on each sale.

Enter Your Pricing Details

Calculate your markup and profit.

Markup Percentage

0%

Gross Profit: $0

What is a Markup Calculator?

A **Markup Calculator** is a simple yet powerful business tool used to calculate the price of a product or service. **Markup** is the difference between a product’s cost and its selling price, expressed as a **percentage** of the *cost*. It’s essential for covering operating expenses and achieving a desired **gross profit**. Unlike **profit margin**, which is based on revenue, markup is calculated solely based on the **Cost of Goods Sold (COGS)**.

The Formula for Markup Percentage

The calculation for **Markup Percentage** is straightforward. It requires two steps: first finding the profit amount, and then calculating the percentage relative to the cost.

1. Gross Profit

**Gross Profit** = Revenue (Selling Price) - Cost (COGS)

2. Markup Percentage

**Markup Percentage** = (Gross Profit / Cost) × **100**

Solved Example

Consider a product where you paid **$75** to manufacture or purchase it (**Cost**) and you sell it for **$125** (**Revenue**). Let's use the **markup calculator** logic:

Step 1: Calculate Gross Profit

Gross Profit = $125 - $75 = **$50**

Step 2: Calculate Markup Percentage

Markup Percentage = ($50 / $75) × 100

Markup Percentage = 0.6667 × 100

**Markup Percentage = 66.67%**

This means you marked up the product by 66.67% of its cost to reach the final **selling price**.

Practical Applications & Use Cases

The **pricing calculator** is vital for effective **pricing strategy** and financial health:

  • **Setting Prices:** Quickly find the correct **selling price** needed to achieve a target markup, ensuring you cover all expenses and meet profit goals.
  • **Negotiating with Suppliers:** Knowing your required markup helps you establish the maximum acceptable **cost of goods sold (COGS)** when dealing with manufacturers or wholesale suppliers.
  • **Profitability Analysis:** Use the tool to compare the **markup percentage** across different product lines to identify your most profitable inventory.
  • **Calculating Gross Profit:** Instantly see the **gross profit calculator** amount per unit, a key metric for budgeting and forecasting.

Common Reference Values for Markup

Industry standards for **markup percentage** vary widely based on sector, competition, and product type:

  • **Retail (General):** Often targets a **50% to 100% markup** (equivalent to a 33% to 50% **profit margin**).
  • **Restaurants/Food Service:** Markups can range from **200% to 400%** on raw ingredients to account for labor and overhead.
  • **Wholesale/Distribution:** Typically operate on lower markups, sometimes **10% to 30%**, due to higher volume and lower operational costs.
  • **The 100% Markup Rule:** A **100% markup percentage** is often referred to as "keystone pricing" in retail. (Note: A 100% markup always equals a 50% **profit margin**.)

Frequently Asked Questions (FAQ)

1. What is the difference between Markup and Profit Margin?

**Markup** is the percentage added to the **cost** to determine the selling price. **Profit Margin** (Gross Margin) is the percentage of your **revenue** (selling price) that remains as profit. Markup is calculated based on cost; Profit Margin is calculated based on revenue.

2. What is a "good" markup percentage?

A "good" **markup percentage** depends entirely on your business model and industry. Generally, a higher markup is better, but it must be balanced against market demand and competitor **pricing** to maximize sales volume and total profit.

3. What is Cost of Goods Sold (COGS)?

**Cost of Goods Sold (COGS)** is the direct cost attributable to the production of the goods sold by a company. This includes the cost of materials and direct labor used to create the product, but excludes general selling and administrative expenses.

4. How does the markup calculator relate to the selling price?

The **selling price** is simply the **Cost** plus the **Gross Profit**. If you know the cost and the desired **markup percentage**, the calculator determines the gross profit amount and adds it to the cost to give you the selling price.

To analyze your profitability from a revenue perspective, use our companion Profit Margin Calculator, or see how to hit a specific price point with our Break-Even Point Calculator.

Ad Placeholder (Responsive)