How the markup calculator works
This markup calculator takes two inputs (your cost price and the markup percentage you want to apply) and instantly works out the selling price, the profit per unit, and your profit margin.
The formula is straightforward: selling price equals cost multiplied by (1 + markup divided by 100). If your cost is $80 and your markup is 25%, the selling price is $80 x 1.25 = $100. Your profit is $20. Simple.
The slider lets you test different markup levels in real time, so you can find the number that keeps you competitive without leaving money on the table.
Markup vs margin (with a worked example)
Markup and margin both measure profitability, but they use different denominators. Markup compares profit to cost. Margin compares profit to revenue. They will always give you different percentages for the same deal.
Here is a concrete example. Say your cost is $100 and you apply a 50% markup:
- Selling price: $100 x 1.50 = $150
- Profit: $50
- Markup: $50 / $100 = 50%
- Margin: $50 / $150 = 33.3%
The markup is 50% but the margin is only 33.3%. If a client or supplier quotes you a "50% margin", make sure you know which number they actually mean. Confusing the two is one of the most common pricing mistakes small businesses make.
For more on margin calculations, try the profit margin calculator. If you are working out sale prices, the discount calculator is useful alongside this one.
How to set the right markup
There is no universal right answer. It depends on your industry, your cost structure, and what the market will bear. A few starting points:
- Retail products often use a 50 to 100% markup (a 100% markup, which doubles the cost, is known as keystone pricing)
- Service businesses commonly mark up labour costs by 20-50% on top of overheads
- Wholesale typically runs lower, around 20-40%, because of volume
- High-value or specialised work can justify markups well above 100%
The number that matters most is whether your selling price covers all your costs, not just direct costs but overheads, time, and a buffer for risk. If the price looks right but the margin still feels thin, look at the hours as well: manual quoting, invoicing and data entry eat into it. Book a free 30-minute call and we'll tell you which of those jobs are worth automating.
