Markup expresses profit as a percentage of cost, and it's the calculation most businesses use when setting a selling price from a known cost. It's easy to confuse with margin (profit as a percentage of selling price) — see our profit margin calculator for that companion calculation.
The formula
For a $60 cost with a 50% markup: selling price = $60 × 1.50 = $90, and profit is $90 − $60 = $30.
Worked examples
| Cost | Markup | Selling price | Profit |
|---|---|---|---|
| $20 | 25% | $25.00 | $5.00 |
| $150 | 40% | $210.00 | $60.00 |
| $8 | 100% | $16.00 | $8.00 |
Markup vs. margin at a glance
| Base | Formula | |
|---|---|---|
| Markup | Cost | profit ÷ cost × 100 |
| Margin | Selling price | profit ÷ selling price × 100 |
A 100% markup always corresponds to a 50% margin (doubling the cost), which is a useful mental checkpoint when converting between the two.
Common mistakes
- Treating markup and margin as interchangeable when setting prices — a target 50% margin requires a 100% markup, not a 50% markup.
- Applying markup to a price that already includes tax — markup should be applied to the pre-tax cost.
Tips
- If you have a target margin in mind, convert it to the equivalent markup first: markup % = margin % ÷ (100 − margin %) × 100.
Frequently asked questions
How do I calculate a selling price from cost and markup?
Multiply the cost by 1 plus the markup percentage as a decimal. A 50% markup on a $60 cost gives $60 × 1.50 = $90.
Is markup the same as margin?
No. Markup is profit divided by cost; margin is profit divided by selling price. The same sale produces two different percentages depending on which base you use.
How do I convert a target margin into a markup?
Use markup % = margin % ÷ (100 − margin %) × 100. For example, a 25% target margin requires roughly a 33.3% markup.
References
- Investopedia — General explainer on markup and cost-based pricing