The Simple Formula to Calculate Markup Without Overpricing Your Product

Markup tells you how much to add on top of what something cost you, so the sale price covers that cost plus the profit you actually want. Price by feel instead of by formula, and it's easy to accidentally sell near break-even.

The Formula

Selling Price = Cost × (1 + Markup %)

Or, if you already know the cost and the price you want to charge, solve it the other way:

Markup % = (Selling Price − Cost) ÷ Cost × 100

Worked Example

1. 1

   Start with your real cost

   A product costs you $40 to make or buy wholesale.

2. 2

   Decide your target markup percentage

   You want a 50% markup on cost.

3. 3

   Apply the formula

   $40 × (1 + 0.50) = $40 × 1.50 = $60 selling price.

4. 4

   Check it against the reverse formula

   ($60 − $40) ÷ $40 × 100 = 50% -- confirms the math.

Why This Matters More Than It Looks

If you quote a "50% margin" but actually calculate it as a 50% markup, you'll collect less real profit than you planned on every single sale -- and that gap compounds fast across a whole product line. Decide up front which one you're actually targeting, then use the matching formula.

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Frequently Asked Questions

Should I calculate markup on cost before or after taxes/shipping?

Use your fully-landed cost -- the price you paid including shipping, fees, and any taxes you can't pass straight through -- not just the sticker price from your supplier. Marking up only the base cost quietly erodes your real profit.

What's a "good" markup percentage?

It depends entirely on the industry -- retail apparel often runs 50-100%+ markup, while low-margin categories like groceries or electronics resale might run 10-30%. There's no universal right number; what matters is that it covers your real costs (including the ones that are easy to forget, like returns and overhead) and leaves the profit you actually need.