Quick Answer: Calculate selling price, gross profit, and equivalent profit margin from a cost and markup percentage, or solve the markup implied by a selling price.
How This Calculator Works
Markup measures profit against cost. It is useful for pricing because it starts from what an item costs to buy, produce, or deliver and adds a percentage uplift to reach a selling price.
Worked Scenario: Scenario: Setting a Retail Price
A retailer buys an item for $70 and applies a 42.857% markup to the cost.
Scenario Inputs
- Cost: $70
- Markup: 42.857%
- Formula: Price = Cost * (1 + Markup)
Outcome: Multiplying 70 by 1.42857 gives a selling price of about 100. The $30 profit is a 42.86% markup on cost and a 30% margin on selling price.
Formula and Methodology
Selling price = Cost * (1 + Markup% / 100)
Gross profit = Selling price - Cost
Markup% = Gross profit / Cost * 100
Margin% = Gross profit / Selling price * 100
Variables
- Cost: The purchase, production, or delivery cost of the item or service
- Selling price: The final revenue amount charged to the customer
- Gross profit: Selling price minus cost
- Markup: Gross profit as a percentage of cost
- Margin: Gross profit as a percentage of selling price
Assumptions
- Inputs are pre-tax and exclude discounts, shipping, payment fees, and overhead unless included by the user.
- Markup is applied to cost, not to the final selling price.
- Equivalent margin is shown to help compare markup-driven pricing with margin-based reporting.
Limitations
- Gross profit does not include operating expenses, interest, or tax.
- If cost is zero, markup is mathematically undefined; the calculator returns 0 for undefined markup outputs.
Practical FAQs
How do I calculate price from markup?
Convert the markup percentage to a decimal, add 1, then multiply by cost. A 70 cost with a 42.857% markup gives 70 * 1.42857, or about $100.
Is markup the same as margin?
No. Markup divides profit by cost. Margin divides profit by selling price. Because the denominator is different, markup is usually higher than margin for the same sale.
What markup gives a 30% margin?
A 30% margin equals a 42.86% markup. The conversion is margin divided by one minus margin, so 0.30 / 0.70 = 0.4286.