Business
Markup Calculator
Enter your cost and the markup you want to apply to get the price to charge.
The formula
profit = cost × markup ÷ 100
price = cost + profit
margin % = profit ÷ price × 100
Worked example
A $60 item with a 66.67% markup
- 60 × 0.6667 = 40 profit
- 60 + 40 = $100 selling price
- 40 ÷ 100 = 40% margin
Where this goes wrong
Applying a target margin as a markup
Wanting a 40% margin and adding 40% to cost gives you a 28.6% margin, not 40%. To reach a 40% margin you have to add about 67% to the cost. The gap widens as the target rises, so the mistake costs most on the products meant to earn most.
Questions
- What markup do I need for a given margin?
- Divide the margin by one minus the margin. For a 40% margin: 0.40 ÷ 0.60 = 0.667, so a 66.7% markup. For a 50% margin you need to double the cost.
- Can markup go above 100%?
- Yes, and often does. A 200% markup triples the cost. Margin, by contrast, can never reach 100% while the item costs anything at all.
- Should markup cover my overheads?
- It has to. Markup applied to the direct cost is what pays for rent, wages, tools and unbilled hours. A markup set only against material cost is how contracting businesses lose money while staying busy.