Money
Markup Calculator
Enter your cost and the markup you want to apply to get the price to charge.
The link carries your figures, so it reopens on exactly these numbers.
What each markup actually leaves you
Applied to the cost you entered. The margin column is the number your accountant means; it is always smaller than the markup, and the gap grows as you climb.
| Add to cost | Selling price | Profit per unit | Gross margin |
|---|---|---|---|
| 25%Leaves a 20% margin. | $75 | $15 | 20% |
| 40%Leaves 28.6% — not 40%. The classic slip. | $84 | $24 | 28.57% |
| 66.67%The markup a 40% margin really needs. | $100 | $40 | 40% |
| 100%Doubling the cost leaves a 50% margin. | $120 | $60 | 50% |
| 150% | $150 | $90 | 60% |
| 400%Even here the margin stops at 80%. | $300 | $240 | 80% |
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.