Markup Calculator

Quick answer

Markup = (price − cost) ÷ cost × 100. Buying at £60 and selling at £90 is a 50% markup, but only a 33.3% margin, because margin divides by price instead. Quoting markup when a client hears margin is how businesses underprice by accident.

Use the markup calculator above

Enter your cost price (what the item or job costs you) and the markup percentage you want to add. The tool returns the selling price, the profit in pounds and the equivalent profit margin. Change either figure and the numbers update, so you can test a few price points before you commit.

How markup actually works

Markup is the amount you add to your cost, expressed as a percentage of that cost. It answers a simple question: "how much am I charging on top of what I paid?" The formulas are short and worth knowing by heart:

• Selling price = cost × (1 + markup %)
• Profit = selling price − cost
• Markup % = (selling price − cost) ÷ cost × 100

So if a product costs you £40 and you apply a 50% markup, the selling price is £40 × 1.50 = £60. Your profit is £60 − £40 = £20. That £20 is half of your £40 cost, which is exactly where the 50% comes from.

The key thing to hold on to is that markup is measured against cost, not against the price the customer pays. That distinction is what separates markup from margin, and getting it wrong is one of the most common pricing errors in small business. A markup percentage calculator and a profit margin calculator answer related but different questions, so it is worth being clear which one you need.

Markup versus margin: the difference that trips people up

Margin is profit as a percentage of the selling price, while markup is profit as a percentage of the cost. Same pounds of profit, different denominator, different percentage. In the £40 cost / £60 price example, the £20 profit is a 50% markup (20 ÷ 40) but only a 33.3% margin (20 ÷ 60). A 100% markup is a 50% margin. A 200% markup is a 66.7% margin. If you tell a supplier or a customer the wrong number, you can badly misjudge how profitable a price really is.

Worked examples with the maths shown

Example 1: a maker pricing a handmade product

Say you run a candle business. Wax, wick, jar, fragrance and packaging cost you £4.50 per candle. You want a 120% markup to cover your time and overheads. Selling price = £4.50 × (1 + 1.20) = £4.50 × 2.20 = £9.90. Profit per candle = £9.90 − £4.50 = £5.40. As a margin, that is £5.40 ÷ £9.90 = 54.5%. Sell 200 a month and you have made £1,080 gross profit before your other costs.

Example 2: a plumber on a cost-plus job

Cost-plus pricing is markup applied to a job's materials and bought-in costs. Suppose parts and a hired tool cost you £180 for a job. You add a 35% markup on materials to cover handling, waste and a small buffer: £180 × 1.35 = £243. Your labour is charged separately. The £63 added to materials is the cost-plus element a simple cost plus calculator would give you. Work out the labour part with an hourly rate calculator and add it on top to reach the full quote.

Example 3: a retailer reverse-engineering a price

Sometimes you start from the price you want on the shelf and need to check the markup. A homeware item costs you £7.20 and you plan to sell it for £14.99. Markup % = (£14.99 − £7.20) ÷ £7.20 × 100 = 108.2%. Margin = (£14.99 − £7.20) ÷ £14.99 = 51.9%. Both numbers describe the same £7.79 of profit, just measured differently.

Choosing a markup that actually leaves you with profit

A markup is not free money. It has to absorb everything between buying stock and banking the proceeds: payment processing fees, packaging, returns, shrinkage, delivery, marketing and your own time. A 20% markup can look healthy on paper and still leave you out of pocket once a 1.5% card fee, free postage and the odd refund are taken out.

Work backwards from the profit you need. If you know your monthly fixed costs, a break-even calculator tells you how many units you must sell at a given markup before you start making money. Pair that with a clear view of your wider numbers using a profit and loss calculator so the markup you set on each item adds up to a business that pays you.

Remember VAT sits on top of your price

If you are VAT-registered, VAT is charged on your selling price and is not part of your markup or your profit. The standard UK VAT rate is 20%, with a reduced 5% rate and a 0% rate on certain goods, as set out by gov.uk VAT rates. Set your markup on the net (ex-VAT) cost and price, then add VAT afterwards. Our VAT calculator handles the add-on so you do not accidentally treat the VAT as margin. Mixing the two up is a fast way to overstate how well a product is doing.

Keep an eye on the tax that follows the profit

Markup creates gross profit, and profit is what you are eventually taxed on. A sole trader pays Income Tax and Class 4 National Insurance on taxable profits, while a limited company pays Corporation Tax. None of that changes how you calculate a markup, but it is a reason not to price so thin that there is nothing left after costs and tax. For broader business and money planning, the MoneyHelper service from the government is a useful free resource, and gov.uk's guide to setting up a business covers record-keeping you will need anyway.

Common mistakes when applying markup

• Calling a markup a margin. A 50% markup is only a 33.3% margin. If you assume they are the same, you will consistently overestimate your profitability.
• Marking up the VAT-inclusive cost. Always work from the net cost and add VAT at the end, or your figures drift.
• Forgetting variable selling costs. Card fees, postage and returns eat into the markup. Build them into the cost before you apply the percentage.
• Using one markup for everything. Fast-moving, low-value items often need a higher markup than premium pieces. Set the percentage per product, not across the board.
• Discounting without recalculating. Knock 20% off a price and your profit can halve. Check the after-discount markup with a discount calculator before you run a sale.
• Ignoring rounding. Pricing to £9.99 instead of £9.90 is fine, but round on the final price, not mid-calculation, so the maths stays honest.

These figures are estimates for guidance only and not personal tax or financial advice. For decisions with significant tax consequences, check the position with HMRC or a qualified accountant.

Related calculators

Once you have a price, line up the rest of your numbers. Compare markup against the selling-price view with the profit margin calculator, find your sales target with the break-even calculator, and turn an agreed price into a professional document with the quote generator.

Markup and the margin it really gives you

Price from your target margin with the profit margin calculator, check the volume you need with break-even, and remember VAT-registered prices need the VAT calculator on top.