Need to know how much to add to your cost to set the right selling price? Use a markup calculator. It’ll give you the answer in seconds. This guide explains what markup is, how to calculate it by hand, and where to find the free Markup Calculator so you don’t have to do the math yourself.
What markup really means
Markup is the amount you add to your cost, shown as a percentage of that cost. Buy something for £10 and sell it for £15, and the £5 difference is your markup—50% of the £10 cost.
The calculation starts with your landed cost, the price you pay before any selling expenses, and ends with the final price tag. Remember, markup is always based on cost, not the selling price.
A coffee shop buys a bag of beans for £8.00 and wants a 75% markup. The markup amount is £8.00 × 0.75 = £6.00. Add that to the cost and the selling price is £14.00. The profit is £6.00, and the margin is £6.00 ÷ £14.00 = 42.9%.
Markup can break down when costs include fixed overheads you can’t split per item, or when a single product has multiple cost layers. Some accountants prefer margin—based on the selling price—instead, so always confirm what your supplier or buyer expects.
How to work it out by hand
- Enter your cost per item.
- Enter the markup percentage.
- See the selling price, profit and margin.
Price = Cost × (1 + markup%) · Margin% = profit ÷ priceMarkup vs Margin vs Profit: Key Differences
| Metric | Formula | Example (Cost $100, Markup 50%) |
|---|---|---|
| Markup | Markup % = (Selling Price - Cost) / Cost × 100 | 50% |
| Margin | Margin % = (Selling Price - Cost) / Selling Price × 100 | 33.33% |
| Profit | Profit = Selling Price - Cost | $50 |
Why getting it wrong costs real money
A café owner set a 50% markup on cakes but forgot to include the £2.50 delivery fee in each cake’s cost. By the third week, she’d lost £400. A builder quoted a 20% markup on labour only to find subcontractor costs had risen; he ended up losing money on every job until he tightened his numbers. Once you know your true cost per unit and stick to a consistent markup, pricing becomes a decision, not a guess. That’s the difference between barely getting by and actually paying yourself.
Worked cases you can copy
Bakery loaf priced at 60% markup
Flour and yeast cost £1.20 per loaf. A 60% markup means £1.20 × 0.60 = £0.72 added. Selling price is £1.20 + £0.72 = £1.92. Profit is £0.72, margin is £0.72 ÷ £1.92 = 37.5%.
Odd cost with rounding trap
A craft brewer buys hops at £17.45 per kg. They want a 42% markup. £17.45 × 0.42 = £7.329. Round to the nearest penny: £7.33. Selling price is £17.45 + £7.33 = £24.78. If they round the markup down to £7.32, they lose 1p per kg—negligible until you multiply by tonnes of hops.
The traps that catch everyone
| Common mistake | What to do instead |
|---|---|
| Using margin percentage instead of markup | Margin is profit divided by selling price; markup is profit divided by cost. If you set a 30% margin thinking it’s markup, your actual markup is 42.9%—you’ll price too low and eat into profit. |
| Adding markup to the selling price by mistake | Markup is added to cost, not to the final price. Adding 25% to £10 gives £12.50, not £10 + 25% of £12.50. The numbers spiral quickly. |
| Ignoring VAT in the cost base | If you reclaim VAT on costs, use the net cost before VAT. If you can’t reclaim it, include the gross cost. Mixing the two turns a tidy 20% markup into a shortfall when VAT is 20% of the price. |
Use our free Markup Calculator
| Tool | What it does |
|---|---|
| Markup Calculator | Turn a cost and markup into a selling price, profit and margin. |
Try the Markup Calculator
Skip the manual maths — enter your numbers and get the answer instantly.
Open the Markup Calculator →One last rule to keep it clean
Small differences in interest rate, term or timing can add up to large sums over the years. Before committing to any financial decision, run a few different scenarios so you can see the full picture and choose with confidence.
Quick checklist to print off
- Markup is always a percentage of cost, never of the selling price.
- Round the markup amount, not the selling price, to avoid tiny leaks.
- Write down every cost layer—don’t let delivery or packaging sneak up on you.
常见问题
Is markup the same as margin?
No. Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A 50% markup is a 33.3% margin. Markup is always the bigger of the two, which is why mixing them up flatters your numbers.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup), using decimals. A 50% markup: 0.5 ÷ 1.5 = 0.333, so a 33.3% margin. This calculator does the conversion for you on every result.
How do I convert margin to markup?
Markup = margin ÷ (1 − margin), using decimals. A 33.3% margin: 0.333 ÷ 0.667 = 0.5, so a 50% markup. A 50% margin needs a 100% markup — doubling the cost.
Should the selling price include tax?
No. The price this produces is tax-exclusive. If your customers pay VAT, GST or sales tax, that goes on top of this price — it is collected, not earned, so it is not part of your profit.
Is there a standard markup I should use?
There is no universal figure. Typical markups vary enormously by industry, business model, stock turnover and how much overhead the gross profit has to cover. What the calculator can tell you is exactly what margin a given markup yields — the decision itself is yours.
