What is Markup?
Markup is the amount you add to your cost price to arrive at a selling price, expressed as a percentage of that cost. If you buy a product for $100 and sell it for $130, your markup is 30%.
Markup is how businesses cover overhead — rent, labor, utilities, marketing — and generate profit. Without a sufficient markup, you may cover your direct product costs while losing money overall once overhead is accounted for.
Unlike margin (which is calculated from the selling price), markup starts from your cost and works forward. This makes it the natural calculation for anyone who begins by knowing their costs and needs to set a price.
Markup vs. Margin — What's the Difference?
Markup is the percentage increase from cost to selling price. Margin is the percentage of the selling price that is profit. They measure the same profit dollar — just from different baselines. Confusing them is one of the most expensive pricing mistakes in business.
Example: You buy a product for $60 and sell it for $100.
- Markup = ($100 − $60) / $60 × 100 = 66.7%
- Margin = ($100 − $60) / $100 × 100 = 40%
The rule to remember: markup percentage is always higher than margin percentage for the same product. If a supplier quotes margin but you calculate markup (or vice versa), you'll underprice and erode your profits.
How to Calculate Markup
Calculating markup is straightforward once you know your cost and target selling price — or your cost and desired markup percentage.
- Know your true cost. Include all direct costs: materials, shipping, labor, packaging. Don't use just the wholesale price.
- Set your markup target. Research industry standards (see the table below) and factor in your overhead.
- Apply the formula. Selling Price = Cost × (1 + Markup% ÷ 100).
- Check your margin. Confirm the resulting margin covers overhead and hits your profit goal.
The calculator above handles all of this instantly. Enter any two values and the third appears automatically.
Markup Formula
Three equivalent formulas depending on which value you need to find:
Average Markup by Industry
Markup varies dramatically across industries based on competition, overhead, and customer expectations. Use these as benchmarks, not rules.
Markup Calculator FAQ
What is the difference between markup and margin?
Markup is calculated as a percentage of your cost. Margin is calculated as a percentage of the selling price. For the same product, markup is always the higher number. A 50% markup equals a 33.3% margin. A 100% markup equals a 50% margin. Use the converter above to switch between them instantly.
How do I calculate markup percentage?
Use this formula: Markup% = ((Selling Price − Cost) ÷ Cost) × 100. Example: cost is $40, selling price is $60. Markup = ((60 − 40) ÷ 40) × 100 = 50%. Or just enter those two numbers into the calculator above — it does the math instantly.
What is a good markup percentage for retail?
The traditional retail standard is "keystone" markup — doubling the wholesale cost, which is a 100% markup (50% margin). Many retailers use 50–80% depending on the product category, competition, and overhead costs. Premium or differentiated products often carry 100–200% or more. Use the industry markup table in the Learn section as a starting point.
How do I convert margin to markup?
Formula: Markup% = Margin% ÷ (100 − Margin%) × 100. Example: 25% margin → 25 ÷ 75 × 100 = 33.3% markup. To go the other way: Margin% = Markup% ÷ (100 + Markup%) × 100. The Margin ↔ Markup Converter at the top of this page handles both directions instantly.
What markup should a contractor use?
Most general contractors apply a 15–35% markup on materials and subcontractor invoices. A 20% markup on materials is a common baseline. Specialty trades (electrical, plumbing, HVAC) often charge 25–50%. The critical step: calculate your overhead rate first. If your overhead is 30% of revenue, your markup needs to cover that before you start earning net profit.
Is markup the same as profit?
No. Markup is the method used to set your price — profit is what's left after all expenses are paid, including overhead. A 50% markup doesn't mean 50% profit. You still pay rent, salaries, insurance, and utilities from that markup. True net profit only appears after every business expense is deducted, not just the direct product cost.