Markup: Pricing Above Your Cost
Markup is the amount added to the cost of a product to arrive at its selling price, expressed as a percentage of cost. It is the foundational pricing tool for retailers, manufacturers, and service businesses. Confusing markup with margin is one of the most common and costly accounting mistakes.
Markup Formula
Selling price = Cost × (1 + markup%)
Markup% = [(Selling price − Cost) ÷ Cost] × 100Examples
- Cost £25, markup 60%: Selling price = £25 × 1.60 = £40
- Cost £50, selling price £80: Markup = [(80−50)÷50] × 100 = 60%
Converting Between Markup and Margin
Margin from markup: Margin = Markup ÷ (1 + Markup)
Markup from margin: Markup = Margin ÷ (1 − Margin)
60% markup → Margin = 0.60 ÷ 1.60 = 37.5%
37.5% margin → Markup = 0.375 ÷ 0.625 = 60%Common Industry Markups
- Grocery retail: 10–30%
- Fashion/apparel: 100–300%
- Electronics: 20–50%
- Restaurant food: 200–300%
- Software/SaaS: 200–500%+ (high gross margins)
The Pricing Mistake
If you want a 40% margin, applying a 40% markup gives you only 28.6% margin. To achieve a 40% margin, you need a 66.7% markup. Set your target margin first, then calculate the required markup.
Calculate selling price from cost: Free Markup Calculator