How it’s calculated
Markup is the amount added to cost, expressed as a percentage of the cost.
Example (OpenStax Contemporary Mathematics, Example 6.16): an item costs 62.00 with a 15% markup. Markup = 62 × 0.15 = 9.30, so the retail price is 71.30. As a margin that is 9.30 ÷ 71.30 = 13.04% of the price.
This is general pricing arithmetic, not financial advice.
Frequently asked questions
What is the difference between margin and markup?
Markup is profit divided by cost; margin is profit divided by selling price. The same sale always has a higher markup % than margin %. A 50% markup equals a 33.33% margin.
What markup gives a 50% margin?
A 100% markup. Doubling the cost (cost 50, price 100) leaves profit of 50, which is half the price.
How do I find the cost from a marked-up price?
Divide the price by (1 + markup). A 29.50 price with an 18% markup came from a cost of 29.50 ÷ 1.18 = 25.00.
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Sources
- Contemporary Mathematics, 6.2: Discounts, Markups, and Sales Tax — OpenStax
- Principles of Accounting, Volume 1, 6.6: Multi-Step and Simple Income Statements for Merchandising Companies (gross margin) — OpenStax
Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.
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