Markup Calculator

Selling price = cost × (1 + markup ÷ 100); gross profit = selling price − cost; gross margin = gross profit ÷ selling price × 100

Cost

What the item costs you to acquire or make, before any markup. This is the number you are adding to, so it sets the scale of everything else: the same 40 percent markup is 4 on a cost of 10 and 4,000 on a cost of 10,000.

Markup

The percentage of the cost you want to add, which is the decision this page exists to execute. It is a percentage of the cost, not of the price — that single fact is the whole difference between a markup and a margin, and it is why the two outputs below never match.

Selling price

Cost plus the markup, in money. This is the page's answer: the figure to charge. Note that it can be below the cost if the markup is negative, which the page allows because a deliberate markdown is a real pricing decision.

Gross profit

The markup expressed in money — the same amount, written as an absolute rather than as a percentage of cost. At a cost of 60 and a markup of 40 percent it is 24, which is what the label adds up to.

Gross margin

The profit as a share of the price rather than of the cost. It is always the smaller of the two percentages, and it is the one a profit-and-loss statement uses, which is why a business that prices by markup and reports by margin sees two different numbers for one sale.

Use it when the price has not been set yet and the cost is what you know. The direction is the point, because this page has a twin: here the cost and the percentage are given and the price comes out; on the margin page the cost and the revenue are given and the percentages come out. Same arithmetic, opposite direction, and the way to tell which page you want is to ask which of your two numbers is money and which is a decision. Two cautions. A markup produces a price that covers the item and nothing else — it is not a model of what the market will pay, and a 60 percent markup on something nobody wants is still a loss. And pricing by markup and reporting by margin is the most common way for a small business to be surprised by its own accounts: the 40 percent it added is the 28.57 percent it earned, and the difference has to cover everything that is not the cost of the goods.

1. Cost 60, add 40 percent

   1. Markup in money: 60 × 40% = 24
   2. Selling price: 60 + 24 = 84
   3. Gross profit: 84 − 60 = 24, the same amount as the markup
   4. Gross margin: 24 ÷ 84 = 28.57 percent

   The 40 percent you added is a 28.57 percent margin, and both are correct descriptions of the same 24. This is the calculation to run before promising anyone a 40 percent margin: adding 40 percent to cost gets you 28.57, and reaching an actual 40 percent margin takes a markup of 66.67 percent, as the table below shows.

2. Cost 60, markup 66.666667 — landing on a 40 percent margin

   1. Markup in money: 60 × 66.666667% = 40
   2. Selling price: 60 + 40 = 100
   3. Gross profit: 100 − 60 = 40
   4. Gross margin: 40 ÷ 100 = 40 percent

   This is the margin page's default sale, reached from the other end: buy at 60, sell at 100, and the margin is 40 percent. Getting there from a cost requires a markup of 66.67 percent rather than 40, which is the single most useful conversion this page performs. The markup is entered here to six decimals so the price lands exactly on 100; in practice you would round the price and accept a margin a few hundredths off.

3. A 20 percent markdown on a cost of 100

   1. Markup in money: 100 × −20% = −20
   2. Selling price: 100 − 20 = 80
   3. Gross profit: 80 − 100 = −20
   4. Gross margin: −20 ÷ 80 = −25 percent

   A negative markup is a markdown, and the page accepts it because selling below cost is sometimes the plan — clearing stock, matching a competitor, or buying a customer. Notice which percentage moved further: the loss is 20 percent of the cost and 25 percent of the price, because dividing by the smaller number gives the larger figure. The same asymmetry that makes markup exceed margin on the way up makes it milder on the way down.

4. A 1,000 percent markup on a cost of 1

   1. Markup in money: 1 × 1000% = 10
   2. Selling price: 1 + 10 = 11
   3. Gross profit: 11 − 1 = 10
   4. Gross margin: 10 ÷ 11 = 90.91 percent

   There is no upper limit on a markup, and this is a real pricing shape for cheap goods with expensive handling — accessories, cables, small parts. The margin, though, has stopped moving: it can approach 100 percent as the cost approaches nothing but can never reach it, which is the structural reason a markup of 1,000 percent produces a margin of only 90.91.

5. Selling at cost: 120 with no markup

   1. Markup in money: 120 × 0% = 0
   2. Selling price: 120 + 0 = 120
   3. Gross profit: 120 − 120 = 0
   4. Gross margin: 0 ÷ 120 = 0 percent

   Zero is a legal markup and produces a price that recovers the goods and nothing else — before rent, wages or fees, so the sale loses money in every practical sense once those are counted. It is worth having in mind as the floor: any markup below it is a decision to pay customers to take the stock.

A markup sets a price from the inside — what the item cost and what you want to make on it — and knows nothing about what anyone will pay. It says nothing about demand, competitors or the price the market has in mind, so a markup can be arithmetically perfect and commercially wrong in either direction. It covers only the cost of the goods: a marketplace fee taken as a percentage of the price, shipping, payment processing and returns all come out of the margin printed here rather than being built into the price. It is also a single-item calculation, and applying one markup across a range assumes every item carries the same overhead, which is rarely true for goods of very different values or sizes. Finally, the margin output is not a target you can hit by iterating the markup you started with — reaching a 40 percent margin from a 40 percent markup takes 66.67 percent, and the page's table does that conversion rather than the field above.

How do I work out a selling price from a markup?

Multiply the cost by one plus the markup as a decimal, so a cost of 60 with a 40 percent markup is 60 × 1.40 = 84. The dollar amount of the markup is 24 and the profit is the same 24; what changes is only how you describe it. The markup is a percentage of what you paid, so it is applied to the cost, never to the price.

Why is the margin lower than the markup I entered?

Because they have different denominators. A markup divides the profit by the cost, a margin divides it by the price, and the price is the larger of the two whenever there is any profit at all — so the margin is always the smaller percentage. On a cost of 60 with a 40 percent markup the price is 84, the profit is 24, and 24 is 40 percent of 60 but only 28.57 percent of 84. There is no sale where these two come out equal except a markup of zero.

What markup gives me a 40 percent margin?

66.666667 percent, and this is worth remembering because 40 is the number people quote by habit on both sides of the sentence. The conversion is margin ÷ (1 − margin): 0.40 ÷ 0.60 = 0.6667. The table below shows the same relationship across a range of markups, so if the margin you need is 23.08 percent the row for a 30 percent markup answers it without any arithmetic.

Can a markup be negative, or more than 100 percent?

Both, and neither is an error. A negative markup is a markdown: a cost of 100 with a markup of minus 20 percent gives a price of 80 and a loss of 20. Above 100 percent is ordinary in some trades — a 200 percent markup means charging three times cost — and there is no ceiling at all, since the percentage is measured against the cost rather than the price. The one value the page refuses is minus 100 percent or below, which would produce a price of zero or a negative one.

Does the price include tax or shipping?

No. The price this page returns is the cost plus the markup, and nothing else has been considered. Sales tax is normally added on top of a price rather than taken out of it, shipping is charged or absorbed separately, and fees charged as a percentage of the sale come out of the margin shown here. If your question is what price leaves you a given margin after a 15 percent marketplace fee, the honest way to use this page is to put the fee into the cost and check what the price becomes.

Should I price by markup or by margin?

Price by whichever you can apply consistently, and report in the other. Pricing by markup suits a business whose cost is the known, stable quantity and whose question is what to add; pricing by margin suits one that starts from the price the market will bear and works backwards. The mistake is not either choice, it is switching between them without noticing — a 40 percent markup and a 40 percent margin are 24 and 40 on the same cost of 60, and the difference comes straight out of what the business keeps.

• Markups — the glossary entry on the amount added to a cost to reach a price, which exists mainly to keep it distinct from a margin — Investor.gov, U.S. Securities and Exchange Commission (United States)
• Profit — the glossary definition of what is left after costs, including the difference between a gross profit and the profit a business finally keeps — Investor.gov, U.S. Securities and Exchange Commission (United States)
• Publication 334 (2025), Tax Guide for Small Business — how the cost of goods sold is worked out for a business that buys and resells, which is the cost this page marks up — Internal Revenue Service (United States)