Calculator
Definition – What is markup?
Markup is the percentage difference from the cost to the sale price.
Formula – How to calculate markup
Price = Cost / (1 – (Gross Margin/100%))
Gross Profit (Dollars) = Price x (Gross Margin/100%)
Markup = (Price / Cost) x 100%
Example
A product has a price of $25 and sells at a gross margin of 75%.
Price = $25 / (1 – (75% / 100%)) = $25 / (1 – 0.75) = $25 / 0.25 = $100
Gross Profit (Dollars) = $100 x (75% / 100%) = $100 x 0.75 = $75
Markup = ($100 / $25) x 100% = 4 x 100% = 400%
Sources and more resources
- Wikipedia – Markup (business) – Some example calculations on how to calculate markup in business.
- Investopedia – How are profit margin and markup different? & Markup – How to calculate markup and how it is involved with business.
- Accounting Tools – The difference between margin and markup – Breaking down how markup and margin are different.