Markup Calculator

A "good" markup percentage varies significantly by industry, product type, and business model. Retail businesses typically use 30-50%, groceries 15-25%, restaurants 60-300%, and luxury goods can go as high as 200-500%. Rather than copying industry standards blindly, consider your specific costs (both direct and overhead), market position, customer expectations, and competitive landscape. Start by calculating the minimum markup needed to cover all costs and provide your desired profit, then test and adjust based on customer response and market conditions.

Markup and margin are related but distinct concepts. Markup is the amount added to the cost price to determine the selling price, expressed as a percentage of the cost. Formula: Markup = ((Selling Price - Cost) / Cost) × 100%. Margin is the profit expressed as a percentage of the selling price. Formula: Margin = ((Selling Price - Cost) / Selling Price) × 100%. For example, if you buy an item for $100 and sell it for $150, your markup is 50% but your margin is 33.3%.

To calculate markup percentage: 1) Subtract the cost price from the selling price to get the markup amount, 2) Divide the markup amount by the cost price, 3) Multiply by 100 to express as a percentage. Formula: Markup% = ((Selling Price - Cost Price) ÷ Cost Price) × 100. For example, if a product costs $40 and sells for $60, the markup amount is $20, and the markup percentage is ($20 ÷ $40) × 100 = 50%.

Using the same markup across all products is generally not recommended. Different products have varying costs, competition levels, perceived value, and price sensitivity. Strategic pricing involves categorizing your products and applying different markup strategies based on factors such as product uniqueness, customer demand, competitor pricing, and product lifecycle. High-volume, low-cost items might have a lower markup while unique or premium products could support higher markups. Regularly review and adjust your pricing strategy based on market conditions and business goals.

To convert from markup to margin: Margin = Markup ÷ (100 + Markup) × 100. For example, a 50% markup equals a 33.3% margin: 50 ÷ (100 + 50) × 100 = 33.3%. To convert from margin to markup: Markup = Margin ÷ (100 - Margin) × 100. For example, a 20% margin equals a 25% markup: 20 ÷ (100 - 20) × 100 = 25%. These conversions are useful when working with different business departments or industry standards that may prefer one metric over the other.