Markup calculator
The formula, a worked example, and the error this particular calculation tends to produce.
How it works
Markup is profit as a share of cost. It is how buying and merchandising teams usually talk, because cost is the number in front of them when they price.
The formula
markup = (price − cost) ÷ cost price = cost × (1 + markup)
- Choose "Cost and markup".
- Enter the unit cost and the markup you apply.
- Read the selling price and the margin it actually produces.
Worked example
| Item | Value |
|---|---|
| Cost | ₹1,000.00 |
| Markup | 40% |
| Selling price | ₹1,400.00 |
| Profit | ₹400.00 |
| Margin | 28.57% |
The mistake to avoid
Assuming a markup target hits the same margin. A 40% markup is only a 28.6% margin — if your plan was stated as a margin, pricing on markup misses it every time.
Questions people ask
What is the difference between margin and markup?
Markup is profit as a share of cost; margin is profit as a share of the selling price. Cost 100 with a 50% markup sells at 150; cost 100 at a 50% margin sells at 200. They agree only at zero, and the gap widens as the percentage rises — at a 70% target the difference is more than double.
Should I apply my margin before or after tax?
Before. Consumption tax is collected on behalf of the government and was never your revenue, so the margin belongs on the tax-exclusive price. Taking the margin on the tax-inclusive figure understates your real margin and underprices the item.