Markup Calculator
Understanding Markup
What is Markup?
Markup is the difference between the selling price of a product and its cost, expressed as a percentage of the cost. It's a key pricing strategy used by businesses to ensure profitability while remaining competitive in the market.
Markup Formulas
The following formulas are used to calculate markup:
Markup Percentage = ((Selling Price - Cost Price) / Cost Price) × 100%
Selling Price = Cost Price × (1 + (Markup Percentage / 100))
Cost Price = Selling Price / (1 + (Markup Percentage / 100))
Markup vs. Margin
It's important to understand the difference between markup and profit margin:
- Markup is calculated as a percentage of the cost price
- Profit margin is calculated as a percentage of the selling price
- For the same product, the markup percentage will always be higher than the profit margin percentage
Profit Margin = ((Selling Price - Cost Price) / Selling Price) × 100%
Tips for Using the Markup Calculator
- Select the value you want to calculate (markup percentage, selling price, or cost price)
- Enter the two known values accurately
- Consider industry standards when setting your markup percentage
- Remember that higher markup doesn't always lead to higher profits if it reduces sales volume
- Use the calculator to experiment with different pricing strategies
Industry Standard Markups
Markup percentages vary widely across industries:
| Industry | Typical Markup Range |
|---|---|
| Grocery/Supermarket | 15% - 25% |
| Clothing Retail | 50% - 80% |
| Electronics | 30% - 50% |
| Jewelry | 100% - 200% |
| Restaurants | 200% - 300% |