Markup formula (and the other 3 formulas you always need)

Markup is one of those business terms that seems simple until you’re staring at a spreadsheet trying to pick a price that covers costs and still leaves profit. This page is built to make it painless: you can plug in any two values and get the rest instantly, plus you’ll get a clear explanation of what the calculator is doing.

• Cost (C): what you pay to produce or acquire the item. This can include materials and labor, or it can be your wholesale cost.
• Selling Price (P): what the customer pays before tax (unless your business includes tax in sticker price).
• Profit (G): gross profit per unit: G = P − C.
• Markup % (MU): how much profit you add relative to cost.
• Margin % (M): how much profit you keep relative to selling price (also called gross margin).

The standard markup formula is: Markup % = (Selling Price − Cost) ÷ Cost × 100. In symbols: MU = (P − C) / C × 100. Markup answers: “How many percent did I add on top of cost?”

The margin formula is: Margin % = (Selling Price − Cost) ÷ Selling Price × 100. In symbols: M = (P − C) / P × 100. Margin answers: “What percent of the selling price is profit?”

If you know cost and target markup, you can compute selling price directly: P = C × (1 + MU/100). Example: cost $40 with 25% markup → P = 40 × 1.25 = $50.

If you know the selling price and markup, solve for cost: C = P ÷ (1 + MU/100). This is common when you’re back-solving a wholesale cost target from a market price.

The calculator uses these formulas, plus a few simple algebra steps, to fill in the missing values. The only time it can’t solve the problem is when you provide values that don’t uniquely define a price (for example, entering only markup % and margin % without cost or price).

Real-world pricing examples (retail, services, ecommerce)

Here are practical examples so you can sanity-check your numbers. You can copy these into the inputs above to see the calculator match the results.

• Cost (C) = $40
• Selling Price (P) = $55
• Profit (G) = 55 − 40 = $15
• Markup % = 15 / 40 × 100 = 37.5%
• Margin % = 15 / 55 × 100 ≈ 27.27%

• Cost (C) = $20
• Markup % (MU) = 50%
• Selling Price (P) = 20 × (1 + 0.50) = $30
• Margin % (M) = (30 − 20) / 30 × 100 = 33.33%

This is the classic confusion. A 40% margin is not a 40% markup. If your margin is 40%, then profit is 40% of price, meaning cost is 60% of price. The equivalent markup is: MU = M / (1 − M) (with M as a decimal).

• Margin = 40% → M = 0.40
• Equivalent markup = 0.40 / 0.60 = 0.6667 → 66.67% markup

For services, cost can be your internal cost per hour (wages + overhead allocation). If your cost is $60/hour and you charge $100/hour:

• Markup % = (100 − 60) / 60 × 100 = 66.67%
• Margin % = (100 − 60) / 100 × 100 = 40%

These examples show why businesses often talk about margin (profit as a percent of sales), while suppliers and contractors often talk about markup (profit as a percent of cost). This calculator includes both so you can speak either language.

How the calculator decides what to compute

The Markup Formula Calculator is built for the real way people work: you rarely have every number upfront. Sometimes you only know your cost and the target markup. Other times, you know the market selling price and you want to see what margin you’re actually making. So instead of forcing a single “mode,” this calculator supports multiple input pairs.

• Cost + Selling Price → computes markup % and margin %.
• Cost + Markup % → computes selling price and margin %.
• Cost + Margin % → computes selling price and markup %.
• Selling Price + Markup % → computes cost and margin %.
• Selling Price + Margin % → computes cost and markup %.

If you only enter markup % and margin %, there is no unique answer without a cost or price, because percentages alone do not define a dollar amount. In that case, the calculator will tell you exactly what to add to make the numbers solvable.

Prices are rounded to two decimals (cents). Percentages are shown to two decimals by default. If you’re doing accounting or tax reporting, keep full precision in your system of record and use this tool for quick pricing checks.

Frequently Asked Questions

• What’s the difference between markup and margin?

  Markup uses cost as the denominator: (P − C) / C. Margin uses selling price as the denominator: (P − C) / P. The same product can have a 50% markup and a 33.33% margin — that’s normal.

• How do I convert margin % to markup %?

  Convert margin to a decimal (e.g., 40% → 0.40), then use: Markup = Margin / (1 − Margin). So 40% margin becomes 0.40 / 0.60 = 0.6667 → 66.67% markup.

• How do I convert markup % to margin %?

  Convert markup to a decimal (e.g., 50% → 0.50), then use: Margin = Markup / (1 + Markup). So 50% markup becomes 0.50 / 1.50 = 0.3333 → 33.33% margin.

• Should I include shipping and fees in “cost”?

  For best results, yes — include all costs you must pay to fulfill one sale (shipping, packaging, platform fees, transaction fees, and a reasonable overhead allocation). If you don’t, the calculator will still be mathematically correct, but your real-world profit might be lower than the “profit per unit” it shows.

• Why is my margin smaller than my markup?

  Because margin divides by selling price, which is bigger than cost. That makes the percentage smaller. Example: cost $20, price $30. Profit $10. Markup = 10/20 = 50%. Margin = 10/30 = 33.33%.

• Can I use this for discounts?

  Yes. If you know your original selling price and a discounted selling price, plug the discounted selling price in as “Selling Price” and use the same cost. You’ll see how your markup and margin change under the discount. This is a fast way to test if a promo still keeps you profitable.

Keep calculating

Use these to double-check pricing, geometry, and everyday math.