Updated on 30 September 2026 by the Proposal Expert editorial team
Your selling price, profit and margin from what it costs you and the markup you add
To calculate markup, divide the profit (selling price minus cost) by the cost and multiply by 100, so a $50 profit on a $100 cost is a 50% markup. This markup calculator also works forwards. Enter what an item or a job costs you and the markup percentage you want, and it gives you the selling price, the profit in money and the margin that markup produces. Use costs and prices before sales tax or VAT. Below you will find the markup formula, a markup to margin table, what retailers mean by markup and how contractors mark up a quote line by line.
Markup % = (price − cost) ÷ cost × 100. Price = cost × (1 + markup ÷ 100). Cost = price ÷ (1 + markup ÷ 100).
Markup always compares the profit with the cost, which is why it is also called markup on cost. To price from a markup, turn the percentage into a multiplier: a 30% markup means multiplying the cost by 1.3, and a 100% markup means doubling it. To find the cost behind a price, divide the price by the same multiplier. A $260 price with a 30% markup covers a cost of $260 ÷ 1.3 = $200.
A landscaping contractor buys an irrigation controller kit for $750 and marks up all materials by 40% on cost. Multiply $750 by 1.4 to get the selling price before tax. The table shows that price, the profit in dollars and the margin next to the 40% markup. The margin is the lower of the two percentages, because the same profit is divided by the larger selling price instead of the cost.
| Cost | $750.00 |
|---|---|
| Selling price | $1,050.00 |
| Profit | $300.00 |
| Margin | 28.57% |
| Markup | 40% |
A markup percentage tells you how much you add on top of what something costs you, measured against that cost. The markup amount is the same thing in money: the selling price minus the cost. Buy a part for $60 and sell it for $90, and the markup amount is $30 while the markup percentage is $30 ÷ $60 × 100 = 50%. Because the percentage is measured against the cost, the easiest way to use it is as a multiplier. Multiply the cost by the multiplier and you have the price before tax. These are the most common markups and their multipliers:
Sometimes you know the selling price and the markup but not the cost, for example when you check a price list or a price a colleague quoted. Divide the price by 1 plus the markup divided by 100. A product sold for $130 with a 30% markup cost $130 ÷ 1.3 = $100. The classic mistake is to take 30% off the price. That gives $130 × 0.7 = $91, which is $9 too low, because the 30% was added to the $100 cost and not to the $130 price. The same logic tells you how much of a price is markup:
Markup and margin measure the same profit against different bases. Markup divides it by the cost, and margin divides it by the selling price. Because the price is always higher than the cost, the margin is always the lower percentage. To convert a markup to a margin, use margin = markup ÷ (100 + markup) × 100. A 25% markup gives 25 ÷ 125 × 100 = 20% margin. If you set your prices from a target margin instead, the margin calculator works that side for you. This markup to margin table covers the markups people use most:
There is no single retail markup, because it depends on the product, how fast it sells and what the shop pays for rent, staff and stock that does not sell. The best-known rule of thumb is keystone pricing: the retailer doubles the wholesale cost, which is a 100% markup and a 50% margin. Be careful when a retailer or a trade article quotes a markup, because in retail the word is often measured against the selling price rather than the cost. The IRS retail method for valuing inventory uses an average markup expressed as a percentage of the total retail selling price. In the example in IRS Publication 538, goods that cost $105,000 have a retail value of $140,000. The markup of $35,000 is 25% of the retail value, which is a markup of 33.3% on cost. Markup on retail is the same calculation as margin, so always ask which base a percentage uses before you compare it with your own.
Contractors and other service businesses rarely use one markup for everything. Materials, your own labour and subcontracted work carry different risks, so many quotes use a different markup per cost type. Mark up your labour on what an hour really costs you, including wages, payroll costs and the hours you cannot bill, not on the rate you charge. The hourly rate calculator helps you find that figure. When you combine lines, do not average the percentages. Work out the overall markup from the totals instead:
Before. Apply your markup to the cost excluding tax, then add sales tax or VAT to the marked-up price. In the UK, you can reclaim VAT on items you buy for use in your business if you are VAT registered, so the VAT on your purchases is not a cost and does not belong in the base you mark up. Mark up a VAT-inclusive cost and you charge a markup on the tax. Take a part that costs £100 plus VAT at the standard rate of 20%, which applies to most goods and services. Marked up by 50% on the £120 gross cost, it sells for £180 plus VAT, which is £216. Marked up on the £100 net cost, it sells for £150 plus VAT, which is £180. If you use the VAT Flat Rate Scheme, gov.uk says you cannot reclaim the VAT on your purchases, except for certain capital assets over £2,000, so that VAT is part of your cost. In the US, a business with a physical or economic presence in a state, called a nexus, may have to collect state and local sales tax from its customers there, and not every state and locality has a sales tax. How the tax appears on your quote depends on the client:
The final step is to put this price into a quote. Enter each line at its marked-up price before tax and check that the subtotal still carries the markup you worked out, especially after rounding or a discount. Proposal Expert's price table calculates VAT and totals, including VAT per line, and the free plan allows 3 quotes and 3 digital signatures a month.
Multiply the cost by 1.3. A cost of $80 becomes a selling price of $104, and the $24 profit is 30% of the cost. The margin on that price is 23.1%, because the same $24 is divided by the higher price.
Subtract the cost from the selling price, divide the result by the cost and multiply by 100. A cost of $45 and a price of $72 give $27 ÷ $45 × 100 = 60% markup.
A 100% markup means the selling price is twice the cost, so a $25 item sells for $50. Retailers call this keystone pricing. It equals a 50% margin, so a 100% markup does not mean the whole price is profit.
No, you end up below cost. A $100 cost with a 25% markup sells for $125, and 25% off $125 is $31.25, which leaves $93.75. The discount is taken from the higher price, so it removes more than the markup added. A 25% markup can absorb a discount of at most 20% before you sell at cost.
IRS Publication 334 suggests dividing gross profit by net receipts and comparing the result with your markup policy. A large difference may show that sales, purchases, inventory or other costs were not figured accurately. This check measures against sales, so compare it with your markup converted to a margin. A 50% markup should show up as a gross profit of about 33.3% of sales.