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