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Markup

Also called: markup percentage, cost-plus markup

Definition: Markup is the amount added to a product's cost to reach its selling price, usually expressed as a percentage of cost: (price − cost) ÷ cost × 100.

Updated November 7, 2026 · How we check facts

Markup is the increase from cost to selling price, measured against the cost. Penn State Extension stresses that it is not the same as profit margin: a 30% markup on a $1.00 item gives a $1.30 price, but the $0.30 profit is only about 23% of that price.

Formula

markup (%) = (price − cost) ÷ cost × 100
price = cost × (1 + markup ÷ 100)

Example

A $50 item sold for $70 earns $20, a markup of 20 ÷ 50 = 40%. The same $20 is a gross margin of 20 ÷ 70 = 28.57%.

Markup vs margin

Markup uses cost as its base and margin uses price, so markup is always the larger percentage. Pricing from a target margin needs price = cost ÷ (1 − margin); University of New Hampshire Extension shows a $2.50 item at 40% margin costs $4.17 but at 40% markup only $3.50. Convert with the markup calculator or the table in how to calculate profit margin.

Calculate it

Free toolMarkup CalculatorMarkup, margin, profit and price in one place.Free toolProfit CalculatorProfit, margin and break-even in one place.

Guides that explain it

Related terms

Gross MarginGross margin is gross profit as a percentage of sales: (sales − cost of goods sold) ÷ sales × 100. It shows how much of each sales dollar remains after direct costs.Gross ProfitGross profit is net sales minus the cost of goods sold: the money left from selling a product after its direct costs, before operating expenses, interest and tax.Percent ChangePercent change is the difference between a new and an original value, divided by the original value and expressed as a percentage; a positive result is an increase and a negative one a decrease.401(k)A 401(k) is an employer-sponsored retirement savings plan in which employees contribute part of their pay, often with employer matching, up to annual limits set by the IRS.Annual Percentage Rate (APR)Annual percentage rate (APR) is the cost of credit expressed as a yearly rate; for many loans it combines the interest rate with certain fees charged when the loan is made.Annual Percentage Yield (APY)Annual percentage yield (APY) is the total interest a deposit account pays over a 365-day period, expressed as a percentage that includes the effect of compounding.Catch-Up ContributionA catch-up contribution is an extra amount that people age 50 or older may add to a 401(k) or similar retirement plan above the normal annual limit, if the plan permits it.Compound InterestCompound interest is interest calculated on both the original principal and the interest already added to it, so the balance grows faster than it would with simple interest.

Sources

  1. Penn State Extension — What's the Difference Between Markup and Profit?
  2. University of New Hampshire Extension — gross margin vs markup pricing