Methodology, examples, and practical guidance
Markup Calculator: Selling Price & Profit Margin
Markup adds a percentage of cost to create a selling price. Use a consistent cost basis when comparing products: a markup on purchase cost alone is different from the same markup on fully delivered cost.
THE METHOD
The formula
Use the following method with your own business figures.
The amount above the entered cost must cover any expenses you have not included. It is not necessarily net profit.
PUT IT TO WORK
A worked example
These figures illustrate the calculation, not a recommended business target.
- $40 item cost × 60% markup = $24 above cost.
- $40 + $24 = $64 selling price.
- $24 ÷ $64 × 100 = 37.5% resulting margin.
A 60% markup on $40 produces a $64 price and a 37.5% margin.
USE THE RESULT
How to interpret the number
Put the result in context
Check whether the amount above cost can support overhead and the intended profit. A consistent markup can produce different dollar contributions on differently priced items.
CHECK YOUR ASSUMPTIONS
Common mistakes
Check the inputs and assumptions
A 60% markup is not a 60% margin. To price to a margin target, divide cost by one minus the target expressed as a decimal.
Questions business owners ask
Use these answers to refine the assumptions behind the calculator—not as a substitute for advice specific to your business.
Can I use this for services?
Yes, if the cost includes the delivery expenses you want to mark up. Check whether a working hourly rate already contains profit before adding another layer.
Planning note: Use this educational estimate alongside your records and qualified professional advice for significant business decisions.