How to Calculate Markup and Set Your Selling Price

Price a product too low and you lose money on every sale; price it too high and it sits on the shelf. Markup is the amount you add to your cost to set a selling price, and getting it right is the heart of profitable retail and ecommerce. This guide explains the markup formula, shows the difference between markup and margin, and walks you through the Markup Calculator so you can set the right price in seconds. It is free and runs in your browser.

What markup is and how the formula works

Markup is the difference between what an item costs you and what you sell it for, expressed as a percentage of the cost. The formula is:

Selling price = cost x (1 + markup %)

Profit = selling price - cost

For example, a 50% markup on a 20 dollar cost adds 10 dollars, giving a 30 dollar selling price. The key thing to understand is that markup is measured against your cost, not your selling price. That is what separates it from margin, which is measured against the selling price. The two numbers are always different for the same product, and confusing them is the most common pricing mistake.

How to use the Markup Calculator

Setting your price takes only a few seconds:

1. Open the Markup Calculator.
2. Enter your cost (what you paid for the item).
3. Enter the markup percentage you want to apply.
4. Read the selling price, the profit per unit, and the resulting margin instantly.

You can also work backwards: if you know the price you want to charge, enter your cost and adjust the markup until the selling price matches. The calculator updates as you type, so you can test several markup levels quickly before committing.

A worked example with real numbers

Say you buy phone cases for 8 dollars each and want a 75% markup.

• Markup amount: 8 x 0.75 = 6 dollars
• Selling price: 8 + 6 = 14 dollars
• Profit per unit: 6 dollars
• Margin: 6 / 14 = 42.9%

Notice the markup is 75% but the margin is only about 43%. If you sell 100 cases, your profit is 600 dollars. Want a round 15 dollar price instead? That is a markup of (15 - 8) / 8 = 87.5%, which lifts your margin to 46.7%.

Markup vs margin: a quick reference

Because both describe the gap between cost and price, it helps to see common pairs side by side:

Margin is always the smaller of the two for a profitable item. Retailers usually think in markup when pricing from a supplier cost, but report profitability in margin. Use the Margin Calculator when you need to go the other direction.

Where markup pricing is used

Markup is the standard pricing method across many industries:

• Retail and ecommerce stores pricing from wholesale cost
• Restaurants pricing dishes from ingredient cost
• Contractors and tradespeople pricing parts on top of labour
• Resellers and dropshippers setting list prices
• Wholesalers setting trade prices for retailers

Different categories carry very different typical markups. Groceries often run on thin markups, while jewellery, apparel and specialty goods can carry markups of 100% or more to cover overhead and slow turnover.

Tips and common mistakes

Avoid these pitfalls when setting prices:

• Do not confuse markup with margin. A 50% markup is not a 50% margin.
• Remember your true cost. Include shipping, packaging and transaction fees, not just the supplier price.
• Account for discounts. If you plan to run sales, build extra markup in so the discounted price still profits. The Discount Calculator helps you check the final price.
• Match markup to turnover. Fast-selling items can carry a lower markup; slow movers need more.

Review your markups regularly as costs change. Browse more pricing tools in calculators or see all tools.

Private and free in your browser

The Markup Calculator runs entirely in your browser. Your cost figures and prices are never uploaded or stored on a server, so your pricing strategy stays private. There is no sign-up and no limit on how many calculations you can run. Bookmark the Markup Calculator and use it whenever you add a new product.