How it works
selling price = cost × (1 + markup ÷ 100)profit = cost × markup ÷ 100
- cost
- what the item costs you
- markup
- the percent you add to the cost
- selling price
- the price you charge
Markup and margin describe the same profit from two angles. On a $40 cost sold at $60, the $20 profit is a 50% markup on cost but a 33% margin on price. A 100% markup doubles the cost and lands at a 50% margin. Mixing the two up eats real money at the till.
Frequently asked questions
What is a 50% markup on $40?
A selling price of $60, with $20 profit per unit.
What is the difference between markup and margin?
Markup is profit as a percent of cost; margin is profit as a percent of the selling price. The same $20 profit is a 50% markup on a $40 cost but a 33% margin on a $60 price.
How do I set a selling price from cost?
Multiply the cost by 1 plus the markup as a decimal. For a 50% markup, multiply by 1.50.
Does a 100% markup mean a 100% margin?
No. A 100% markup doubles the cost, which works out to a 50% margin.