What is markup?
- Markup is how much you add on top of your cost to set a selling price.
- It's expressed as a percentage of cost, not of the final price — that's what separates it from margin.
- A $40 cost sold for $60 is marked up $20, which is 50% of the $40 cost.
The markup formula
Markup % = (Selling price − Cost) ÷ Cost × 100. Rearranged to solve for price: Selling price = Cost × (1 + Markup %). A $40 cost marked up 50% becomes $40 × 1.5 = $60.
Markup vs margin — same profit, different math
Because both are "profit as a percentage," it's easy to assume a 50% markup and a 50% margin land you in the same place. They don't. Markup divides profit by cost; margin divides the same profit by the selling price — a bigger number, so margin is always the smaller of the two. A 50% markup on a $40 cost gives a $60 price and $20 profit, which is a 33.3% margin, not 50%. The gap widens as the percentage climbs: a 100% markup (doubling your cost) is exactly a 50% margin, and a 300% markup is only a 75% margin. Price something assuming the two are interchangeable and you'll under- or over-price it without realizing.
Typical markup by industry
What counts as a normal markup varies enormously by category — there's no single right number.
These ranges come from published industry sources and vary by business model, overhead and competition — treat them as context, not a target.
Common markup mistakes
The most frequent one is using a markup percentage as if it were a margin percentage when pricing — a 40% markup only nets a 28.6% margin, not 40%, so pricing to "hit 40%" by markup alone leaves less profit than intended. A second is applying one flat markup across an entire product line regardless of how each item actually sells: slow movers usually need a higher markup to be worth carrying at all, while high-volume items can often afford a thinner one because the volume makes up the difference.
When to think in markup vs margin
Markup is usually the more natural starting point when you're pricing from a known cost — "what do I add on top?" — which is why suppliers, wholesalers and manufacturers typically quote in markup terms. Margin is more useful once you're managing a business overall, since it tells you directly what share of every sales dollar is actually profit, which is what covers your fixed costs and take-home pay. Neither is more correct — they're the same relationship read from two different directions. If you'd rather start from the price or margin side instead of the cost side, the profit margin calculator is built for that; see the full breakdown of margin vs markup for worked examples.