Markup Calculator

How it works

Markup is the percentage added to the cost price of a product to arrive at the selling price. It is always calculated on cost, so a 50% markup on a £10 item adds £5, giving a selling price of £15.

The formula

Why this works: Markup treats the cost price as the base. Multiplying the cost by the markup percentage gives the amount of profit to add. The selling price is then the cost plus that profit. Because the denominator is cost rather than selling price, a 100% markup doubles the cost rather than reducing the selling price to zero.

Worked examples

Markup vs margin: the most common pricing mistake in UK small businesses

Markup and profit margin are calculated differently, and confusing the two is the most widespread pricing mistake made by UK small business owners. Markup is based on cost; margin is based on selling price. A 50% markup on a £10 cost gives a £15 selling price and a £5 profit, but that profit is only 33.3% of the £15 selling price. So a 50% markup delivers a 33.3% margin, not 50%.

This matters because many businesses set a target margin (say, 40%) and mistakenly apply it as a markup. The result is consistent underpricing. To achieve a 40% margin, you need to apply a markup of 40/(1-0.40) x 100 = 66.7%, not 40%. The gap between markup and margin grows with the percentage: a 25% markup gives a 20% margin, but a 100% markup gives a 50% margin.

Typical markup ranges in UK industries reflect the need to cover not just cost of goods but also overheads and desired net profit. Clothing and footwear retail typically operates on 120-200% markups on wholesale cost. Hospitality applies 200-400% markups on food ingredients. Building and trade contractors typically mark up materials 20-35%. Understanding your sector's norms helps you benchmark whether your pricing is competitive and sustainable.

When to use this

Markup calculations are central to pricing decisions across UK retail and trade:

• Retail and wholesale buying: A clothing shop buys a coat for £60 from a wholesaler and wants to apply a 150% markup. The selling price is £150. Knowing this up front avoids having to reverse-engineer pricing from competitor shelf prices.
• Trade and building materials: Plumbers, electricians, and builders typically charge customers for materials at cost plus a 25-40% markup to cover sourcing time and warranty risk. On a £800 boiler, a 35% markup adds £280, making the customer price £1,080 for parts alone before labour.
• Restaurant and hospitality menus: A chef needs ingredients to cost no more than 25-30% of the menu price to remain viable. An ingredient cost of £4 needs a selling price of at least £13.33 for a 30% food cost ratio, which is equivalent to a 233% markup. Using this calculator helps price new dishes consistently.
• Handmade and craft goods: Sellers on Etsy, Not On The High Street, and at markets need to recover material costs, time, and platform fees. A minimum 100% markup on material costs (doubling the cost price) is a common starting point, with adjustments for market price and time invested.

Understanding the result

The markup amount grows proportionally with the cost price. A 50% markup on a £10 item gives £5 markup and a £15 selling price. The same 50% markup on a £100 item gives £50 markup and a £150 selling price. Markup scales linearly, which makes it predictable across a product range where costs vary but the margin target is fixed.

Remember that the selling price shown here is before VAT. If your business is VAT-registered and the goods are standard-rated, add 20% on top of the marked-up selling price before presenting it to consumers.

Related concepts

➡ To see what profit margin percentage your chosen markup actually generates, the profit margin calculator converts the markup into the equivalent margin on selling price. ➡ If you know the selling price and markup rate but need to recover the original cost, the reverse percentage calculator works backwards from the selling price to the cost before markup. ➡ Once the selling price is set, the VAT calculator shows how much to add for standard-rated goods before billing your customer.

How to do this in Excel

Put the cost price in A1 and the markup percentage in B1. The formula adds 1 to the markup rate (as a decimal) and multiplies by cost to give the selling price in one step. For the markup amount only, use =A1*B1/100. To calculate the equivalent profit margin, use =(B1/100)/(1+B1/100)*100 to see the margin your markup delivers.

How to do this without a calculator

Multiply the cost by the markup decimal and add it to the cost. For a 50% markup on £40: 50% of £40 = £20, selling price = £60. For less round markups, find 10% first by dividing by 10, then scale. For a 35% markup on £80: 10% = £8, 30% = £24, 5% = £4, so 35% = £28, selling price = £108. For high markups like 200%, simply multiply the cost by 3 (tripling the cost gives 200% markup).

Real world uses

• Setting the retail price of clothing or footwear bought from a wholesale supplier.
• Calculating the charge-out rate for building materials supplied to a customer alongside labour.
• Working out menu prices for a restaurant based on ingredient costs and a target food margin.
• Pricing handmade goods for sale on a marketplace such as Etsy or Not On The High Street.
• Checking whether a selling price delivers enough profit after covering buying costs and overheads.

Common mistakes

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