Pricing Markup Guide
Markup is a pricing metric that represents the difference between a product's unit cost and its selling price, expressed as a percentage of the cost. Retailers use markup to ensure they cover production costs and overhead expenses.
- cost-relative: Markup calculates profit as a percentage of the unit cost.
- pricing tool: Markup percentages are added to the cost to establish the retail selling price.
- not margin: A 50% markup does not mean a 50% profit margin. Markup is always higher than margin.
Unit Selling Price Markup Formula
| Symbol | Meaning & Description |
|---|---|
| Price | Unit Selling Price |
| Cost | Unit Cost (COGS) |
| Markup% | Cost markup percentage |
Multiplier = 1 + (Markup ÷ 100) = 1 + (30 ÷ 100) = 1.3000
Price = Cost × Multiplier = $50 × 1.30 = $65.00
Profit = Price - Cost = $15. Margin = (Profit ÷ Price) × 100 = 23.08%
Markup Calculator Sandbox
Tweak variables below to see the formula calculate instantly.
Confusing Markup and Margin: Standard pricing mistakes happen when businesses assume a 30% markup yields a 30% profit margin. If a product costs $70 and sells for $91 (30% markup), the gross profit is $21. This results in a profit margin of only 23% ($21 / $91).
Markup Calculator
Calculate unit selling price and profit margin from cost and markup percentage.