How to work out a markup
- Choose what to work out: the price from a markup, the price from a target margin, or the markup from a price you already charge.
- Enter the Cost of the item, then the markup, margin or selling price.
- Read the selling price or markup, with the profit and both percentages. The table compares common markups with the margins they give.
Markup to margin
Mixing up markup and margin is a common pricing mistake: adding a 30% markup only gives a 23% margin. Use this table to convert between them.
| Markup | Margin |
|---|---|
| 20% | 16.67% |
| 25% | 20% |
| 33.33% | 25% |
| 50% | 33.33% |
| 75% | 42.86% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.67% |
The formulas: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin), with both as decimals.
Choosing a markup
Cost-plus pricing adds the same markup to everything, which is simple but ignores what customers will pay. Your markup has to cover more than the item: rent, wages, card fees, returns and anything else that isn’t in the unit cost. Check that your prices at least reach your break-even point with the break-even calculator, and remember that sales tax is added on top of the selling price, not taken out of your markup.