Markup Calculator
Calculate markup percentage, gross profit, and selling price from unit cost.
Enter your numbers to calculate your markup.
Input unit cost and selling price to view instant markup analysis.
A 150.00% markup adds $60.00 in gross profit per unit, yielding a 60.00% profit margin.
Every $100 in revenue yields $60.00 in gross margin after covering direct costs.
Formulas & Logic
Transparent mathematical formulas behind this calculation engine.
Markup Percentage
Markup (%) = (Gross Profit / Cost) × 100Markup shows the exact percentage added on top of your acquisition or production cost to establish your final selling price.
Selling Price from Markup
Selling Price = Cost × (1 + (Markup / 100))The foundational formula for cost-plus pricing: calculates the exact shelf price needed to achieve your target markup rate.
Gross Profit
Gross Profit = Selling Price - CostThe net dollar gain generated per unit sold before deducting indirect operational overhead and income taxes.
Resulting Profit Margin
Profit Margin (%) = (Gross Profit / Selling Price) × 100Measures the portion of the customer price retained as gross profit. Profit margin is always lower than markup on profitable goods.
Worked Example
Retail Wholesale Sourcing Example
A specialty home goods retailer purchases a handcrafted ceramic dinner set from an artisan supplier for $40.00 and prices it at $100.00 in their retail showroom.
- Unit Cost (COGS)
- $40.00
- Retail Selling Price
- $100.00
- Markup
- 150.00%
- Gross Profit
- $60.00
- Profit Margin
- 60.00%
- Return on Cost
- 150.00%
- Gross Profit = $100.00 - $40.00 = $60.00
- Markup (%) = ($60.00 / $40.00) × 100 = 150.00%
- Profit Margin (%) = ($60.00 / $100.00) × 100 = 60.00%
- Return on Cost (%) = ($60.00 / $40.00) × 100 = 150.00%
Takeaway: The retailer applied a 150% markup to the $40 wholesale cost. This generates $60 in gross profit per unit and establishes a 60% gross profit margin.
Methodology & Assumptions
Underlying definitions and operational accounting principles.
- Cost Basis (COGS)
- Calculated against direct unit variable cost (inbound freight, supplier wholesale price, direct manufacturing). Indirect overhead like rent and utilities is excluded.
- Equivalence to Return on Cost
- In unit-level pricing, markup percentage and return on unit cost are mathematically identical: both equal (Gross Profit / Cost) × 100.
- Pre-Tax Retail Pricing
- Calculations assume pre-tax pricing. Sales tax or VAT collected on behalf of taxing authorities is excluded from gross revenue and cost.
Frequently Asked Questions
Practical answers regarding margins, markups, and pricing strategy.
What is the difference between markup and profit margin?
Markup calculates profit as a percentage of cost, while profit margin calculates profit as a percentage of selling price (revenue). Because cost is lower than selling price on profitable sales, markup percentage is always higher than margin percentage for the same product.
Can markup be higher than 100%?
Yes, markup can easily exceed 100%. A 100% markup doubles the cost (e.g., $50 cost sells for $100). A 200% markup triples it ($50 cost sells for $150). In industries like apparel, cosmetics, and jewelry, markups between 150% and 400% are common.
Why does a 100% markup equal a 50% profit margin?
If an item costs $50 and sells for $100, profit is $50. The markup is ($50 / $50) × 100 = 100%. The profit margin is ($50 / $100) × 100 = 50%. You made 100% on what you spent, but retained 50% of the customer transaction price.
What is cost-plus pricing?
Cost-plus pricing is a pricing strategy where a business calculates the total cost of producing or purchasing a unit and adds a fixed markup percentage to guarantee a predictable profit margin per sale.
What happens if cost is zero in a markup calculation?
If unit cost is $0.00 and selling price is positive, markup is mathematically undefined because division by zero is impossible. However, the profit margin is 100% because all proceeds are gross profit.
When is a markup calculator useful?
A markup calculator is most useful during cost-plus pricing workflows—such as retail purchasing, wholesale distribution, contracting, and manufacturing—where you start with known unit or project costs and need to apply a predetermined markup to establish a profitable shelf or invoice price.
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