How to calculate markup

Markup (calculation)

Markup is the difference between your buy and sell price divided by your buy price, times 100.

The markup formula shows that sale price minus the cost of goods or services sold, divided by the cost of goods or services s

How to calculate markup

Example of a markup calculation

Let’s say you make sofas for $1000 and sell them for $1350, and want to know your markup. The calculation goes like this:

Example shows $1,350 minus $1,000, divided by $1,000, times 100, equals 35 percent markup.

Using markup to set prices

Many businesses apply a set markup to inventory costs to arrive at a retail price. In that case, the equation works the other way around.

To use markup to set prices, multiply the cost of goods or services sold by the markup, then add the cost of goods or service

How to calculate sales price with markup

Example of a marked-up sales price calculation

Let’s say you make sofas and the cost to produce one is $1000. You’ve decided on a 35% markup:

Example shows $1,000 times 0.35, plus $1,000, equals $1,350 selling price.

See related terms

Margin vs markup

More terms

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Disclaimer

This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.