Markup is profit divided by cost
Markup answers how much the selling price sits above cost, as a percent of the cost:
(selling price − cost) ÷ cost × 100
A 25% markup on an $80.00 cost is $20.00 of profit and a $100.00 selling price. The same $20.00 of profit on a $100.00 price is a 20% profit margin, because margin divides by the selling price. Use the profit margin calculator for that question. A 25% markup is not a 25% margin.
The SBA glossary describes gross profit against net sales, which is a sales-base ratio. This page’s markup is the cost-base ratio above. The SBA does not supply this markup definition.
Two questions
- What price does this markup produce? Profit is
cost × markup ÷ 100, rounded half up to the nearest cent, then added to cost. - What is the markup? The percent is
(price − cost) ÷ cost × 100, rounded half up to six decimal places.
50% markup on $0.01 is half a cent, which rounds to $0.01 of profit and a $0.02 price. A selling price of $75.00 on a $100.00 cost is −25% markup. A typed markup cannot be negative; enter the lower selling price instead.
Limits
A computed price above $100,000,000.00 is rejected rather than clamped. A $0.00 cost is rejected for both questions: the markup percent of zero is not defined, and a markup percent cannot produce a selling price from nothing. To compare two packages, use the unit price calculator and keep both quantities in the same measure.
Frequently asked questions
Why is 25% markup on $100 a $125 price?
The $25 is 25% of the $100 cost. A 25% margin on that same $100 cost needs a
higher price, $133.33, because the profit has to be 25% of the selling price.
Can markup be negative?
Yes, when you enter a selling price below cost. The result is a loss. This
page does not accept a minus sign in the markup field.
Are costs sent to analytics?
No. Analytics may record that this calculator ran. The amounts stay in the
browser.
Sources & review
- Glossary of Business Financial Terms — U.S. Small Business Administration
Last reviewed: . The formula is reproduced above so you can check the math independently.
Educational estimate only. Overhead, fees and whether a price covers your costs are not checked.