Markup calculator ("mark up calculator" is an alternative spelling) is a business tool most often used to calculate your sale price. Just enter the cost and markup. It can also be used to calculate the cost - in this case provide your revenue and markup. If you want to calculate markup percentage, then provide cost and revenue. Keep on reading to find out what markup is and how to calculate markup. You may also want to try markup/margin with VAT or markup/margin with sales tax, plain VAT calculator or sales tax calculator. Markdown calculator does a nifty thing - it shows you what markup or margin you need to set in order to be able to give a certain discount to your customer and still maintain a desired level of profitability. Margin with discount is especially helpful when you want negotiate a price with the customer. Free your mind of any math and focus on the talking!
What is markup?
Markup is a ratio of profit to cost expressed as a percentage. Profit is a difference between the revenue and the cost. For example, when you buy something for $80 and sell it for $100, your profit is $20. The ratio of profit ($20) to cost ($80) is 25%.
Now that you know what markup is, keep in mind that it is easy to confuse markup with profit margin. Profit margin is a ratio of profit to revenue as opposed to markup's ratio of profit to cost. With profit margin, you compare your profit to the selling price, not the purchase price. In our example, we would compare $20 to $100, so profit margin equals 20%.
How to calculate markup?
- determine your COGS (cost of goods sold). For example
- find our your gross profit by subtracting cost from revenue. We're selling for
$50, so the profit is
- divide profit by COGS.
$10 / $40 = 0.25.
- express it as percentages:
0.25 * 100 = 25%.
- this is how you calculate markup... or simply use our markup calculator!
The formula for markup is as follows:
markup = 100 * profit / cost. We multiply by 100 because we express it as a percentage, not as a fraction (25% is the same as 0.25 or 1/4 or 20/80). This is a simple percent increase formula.
When you don't know the profit, only how much we bought something for (cost) and sold it for (revenue), we simply substitute profit for the formula for profit.
Profit = revenue - cost, so
markup = 100 * (revenue - cost) / cost.
And finally, if you need the selling price, then try
revenue = cost + cost * markup / 100. This is probably the most common scenario - you know how much you paid for something and what your usual markup is and want to find out the sale price.
Go ahead and try to enter different numbers into the markup calculator above. Fill in any two fields and the 3rd one will be automatically calculated.
Markup calculator was one our first calculators that got a lot of love from our users. It's just one of those tasks that sales people have to perform often - they enjoy the flexibility of our tool (and the fact that they don't have to know how to calculate markup).