The markup formula
Selling Price = Cost × (1 + Markup%)
Example: Cost $30, 40% markup
Selling Price = $30 × 1.40 = $42.00
Markup is calculated on cost, not on the selling price — a 40% markup means adding 40% of the cost on top of what you paid, not that 40% of the final price is profit. This is different from profit margin, which measures profit as a percentage of the selling price. A 40% markup on a $30 cost gives a $42 selling price, but that $12 of profit is only 28.6% of the $42 selling price — a 28.6% margin, not 40%.
Markup and margin conversion
Markup and profit margin use the same profit amount but divide it by different values. If you know the markup, you can convert it to the equivalent margin with:
Margin = Markup ÷ (1 + Markup)
Example: 40% markup
Margin = 40% ÷ 1.40 = 28.6%
To convert a target margin into markup, use the Profit Margin Calculator, which can also help you find the selling price needed to reach that margin.
Markup reference table
| Markup | Equivalent Margin | Cost | Selling Price |
|---|---|---|---|
| 10% | 9.1% | $100 | $110.00 |
| 20% | 16.7% | $100 | $120.00 |
| 25% | 20.0% | $100 | $125.00 |
| 33.3% | 25.0% | $100 | $133.33 |
| 50% | 33.3% | $100 | $150.00 |
| 66.7% | 40.0% | $100 | $166.67 |
| 100% | 50.0% | $100 | $200.00 |
| 200% | 66.7% | $100 | $300.00 |
Frequently asked questions
What's the difference between markup and margin?
Markup is profit divided by cost, while margin is profit divided by selling price. For example, a 40% markup produces a 28.6% profit margin. A 40% profit margin, on the other hand, requires a 66.7% markup.
How do I calculate markup?
Markup is calculated by subtracting cost from selling price and dividing the result by cost. The formula is Markup = (Selling Price − Cost) ÷ Cost. Multiply by 100 to express the result as a percentage. For example, a product that costs $40 and sells for $60 has a 50% markup.
How do I calculate selling price from cost and markup percentage?
Multiply the cost by 1 plus the markup percentage as a decimal. A $50 cost with a 25% markup is $50 × 1.25 = $62.50.
What markup percentage should I use?
It depends heavily on the industry, your overhead costs, and competitive pricing. Retail markups commonly range from 30–100%+ depending on the product category; wholesale and B2B markups are often thinner. There's no universal correct number.