Markup Engine

Choose your calculation goal below.

🎯 I want to calculate...

📦 Cost of Goods (COGS) $50

📈 Desired Markup (%) 50%

0% 500%

🏷️ Selling Price $75

RECOMMENDED SELLING PRICE

$75.00

✅ Ensures 50% Markup

💰

Gross Profit $25.00

📊

Gross Margin 33.33%

⚖️

Cost Multiplier 1.5x

Cost (100%) Markup Added

Your selling price is Cost + Markup

What is Markup?

Markup is the amount you add to the cost price of a product to determine its selling price. It is your profit expressed as a percentage of your cost.

The Foundation

Markup starts with your Cost of Goods Sold (COGS). This is your baseline (100%).

The Addition

You add a percentage on top (e.g., 50%). This added amount is your Gross Profit.

The Result

Cost + Markup Amount = Final Selling Price. A 100% markup means doubling the cost.

Essential Markup Formulas

💲

Selling Price Formula

Cost × (1 + Markup%)

📈

Markup % Formula

((Price - Cost) / Cost) × 100

💰

Gross Profit

Selling Price - Cost

The "Markup vs Margin" Trap

This is the #1 mistake new business owners make. A 50% Markup is NOT a 50% Margin. Confusing these two will lead to lower profits than expected.

🟢 Markup

Based on Cost

Formula: Profit / Cost
Always HIGHER than Margin
Can exceed 100% easily
Used for: Pricing Strategy

🔵 Gross Margin

Based on Price

Formula: Profit / Price
Always LOWER than Markup
Cannot exceed 100%
Used for: Financial Reporting

Cost	Price	Markup %	Margin %
$100	$150	50%	33.3%
$100	$200	100%	50.0%
$100	$300	200%	66.6%

Typical Markups by Industry

👔

Clothing

Often 100% to 250%. This is called "Keystone Pricing" (doubling the wholesale cost).

🚗

Automobiles

Very low, often 5% to 10% on new cars. Dealers make money on service and financing.

🍔

Restaurants

Around 300% on food and up to 500% on beverages to cover high labor and rent costs.

Frequently Asked Questions

What is the formula for Markup?

Markup Percentage = ((Selling Price - Cost) / Cost) × 100. It measures how much you increased the price over the cost.

Is Markup the same as Profit Margin?

No. Markup is calculated based on cost, while Margin is calculated based on revenue. Markup will always be a higher percentage number than Margin for the same transaction.

What is a "Keystone" markup?

Keystone pricing refers to a 100% markup strategy, meaning you simply double your wholesale cost to determine the retail price.

Can Markup be negative?

Yes, if you sell a product for less than it cost you to buy or make it, you have a negative markup (a loss). This is sometimes done strategically as a "loss leader."

Why do I need to know my markup?

Knowing your markup ensures you are covering not just the cost of the item, but also your overheads (rent, salaries, marketing) and still making a net profit.

How do I calculate price from markup?

Selling Price = Cost × (1 + (Markup Percentage / 100)). For example, Cost $50 with 20% Markup = 50 × 1.20 = $60.

What is a good markup percentage?

It varies by industry. Grocery stores operate on thin markups (10-15%), while luxury fashion or jewelry might use markups of 200-500%.

Does COGS include shipping?

Yes, your Cost of Goods Sold should ideally include the purchase price plus the freight/shipping costs to get the item to your warehouse. This ensures your markup covers the true landed cost.

Can markup be infinite?

Mathematically, if your cost is zero (e.g., finding a diamond on the street), your markup is undefined or infinite. Margin, however, would simply be 100%.

Which is better to track: Markup or Margin?

Use Markup when pricing individual items. Use Margin when analyzing the overall financial health of your company.

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Markup Calculator - Retail Price Setter