Markup is the percentage added to the cost price of a product or service to determine its selling price. It is calculated as (Selling Price - Cost) / Cost × 100. For example, if a product costs $40 and you sell it for $60, the markup is 50%.

How do you calculate markup percentage?

Markup % = ((Selling Price - Cost) / Cost) × 100. First subtract the cost from the selling price to get the profit, then divide by the cost and multiply by 100. Example: Cost is $80, selling price is $120. Profit is $40. Markup = ($40 / $80) × 100 = 50%.

What is the difference between markup and margin?

Markup and margin both measure profitability but use different denominators. Markup is profit divided by cost — it tells you how much you added on top of cost. Margin is profit divided by selling price — it tells you what percentage of revenue is profit. A 50% markup equals a 33.3% margin. Markup is always higher than margin for the same transaction.

What is a good markup percentage?

It depends on your industry. SaaS and software companies typically operate at 200–900% markup (70–90% gross margin). Professional services use 100–230% markup. Retail ranges from 50–150%. Grocery and wholesale operate at 5–30%. The right markup must cover all your costs — not just COGS, but overhead, marketing, and profit targets.

How do I convert markup to margin?

Margin = Markup / (1 + Markup), where both are expressed as decimals. For example, a 50% markup (0.50) converts to 0.50 / 1.50 = 0.333, or 33.3% margin. Going the other way: Markup = Margin / (1 - Margin). A 40% margin (0.40) converts to 0.40 / 0.60 = 0.667, or 66.7% markup.

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Q: How do I calculate selling price from markup?

Selling Price = Cost × (1 + Markup % / 100). For example, if your cost is $25 and you want a 60% markup: Selling Price = $25 × (1 + 60/100) = $25 × 1.60 = $40. Your profit on each sale would be $15.

Calculate markup percentage, selling price, and profit margin instantly. See the difference between markup and margin — the most common pricing mistake.

How It Works

Enter your cost price

Input what you pay to produce, purchase, or deliver your product or service

Set markup or selling price

Enter your desired markup percentage, or switch modes and enter your selling price to reverse-calculate markup

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Get selling price, profit, markup percentage, and gross margin — plus see how markup and margin differ

Calculation Mode

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Enter Your Numbers

Enter cost and desired markup to calculate selling price

Cost Price ($)

What you pay to produce or acquire the product

Markup (%)

Percentage added on top of cost

Results

Your markup and margin breakdown

Selling Price

—

Profit

—

Markup

—

Markup = (Profit / Cost) × 100

Gross Margin

—

Margin = (Profit / Selling Price) × 100

Industry Benchmarks

Typical markup ranges by industry

SaaS / Software

70–90% margin

200–900%

Professional Services

50–70% margin

100–230%

Retail (Clothing)

40–60% margin

100–150%

Restaurants

55–65% margin

200–350%

Grocery

1–3% margin

5–25%

Wholesale

10–20% margin

15–30%

Understanding Markup

The pricing formula that determines your profit on every sale

What Is Markup?

Markup is the percentage added to the cost price of a product or service to determine its selling price. It represents how much more than the cost you charge your customers. For example, if a product costs $50 to produce and you sell it for $75, your markup is 50% — you added half the cost on top. Markup is one of the most fundamental concepts in pricing because it directly controls your profit per unit sold.

How to Calculate Markup

The markup formula expresses profit as a percentage of cost:

Markup % = ((Selling Price - Cost) / Cost) × 100

To calculate selling price from markup:

Selling Price = Cost × (1 + Markup % / 100)

Example: You sell a SaaS product with a delivery cost of $20 per user per month. You want a 150% markup. Selling price = $20 × (1 + 150/100) = $20 × 2.5 = $50. Your profit is $30 per user, and your gross margin is 60%.

Markup vs Margin: The Key Difference

Markup and margin both measure profitability, but they use different denominators — and confusing them is one of the most common pricing mistakes in business:

Markup is profit as a percentage of cost. It answers: "How much did I add on top of what I paid?"
Margin is profit as a percentage of selling price. It answers: "What fraction of revenue is profit?"

Markup % = (Profit / Cost) × 100

Margin % = (Profit / Selling Price) × 100

Why this matters: A 50% markup does not equal a 50% margin. If you buy something for $100 and mark it up 50%, you sell it for $150. Your markup is 50%, but your margin is only 33.3% ($50 / $150). Markup is always higher than margin for the same transaction because cost is always smaller than selling price.

To convert between them: Margin = Markup / (1 + Markup) and Markup = Margin / (1 - Margin), where both are expressed as decimals. For example, a 0.50 markup (50%) equals a 0.333 margin (33.3%).

Markup by Industry

Typical markup percentages vary widely by industry due to differences in cost structure, competition, and perceived value:

SaaS and Software: 200–900% Markup (70–90% Margin)

Software has near-zero marginal cost per additional user, enabling the highest markups of any industry. The cost of goods sold is primarily hosting and infrastructure, which scales sublinearly with users.

Professional Services: 100–230% Markup (50–70% Margin)

Consulting, legal, and accounting firms mark up labor costs significantly. The "cost" is primarily employee compensation, and the markup covers overhead, profit, and business development.

Retail and E-commerce: 50–150% Markup (30–60% Margin)

Wide range depending on category. Fashion and accessories command higher markups (100–150%), while electronics and commodities operate on thinner margins (15–50%).

Grocery and Wholesale: 5–30% Markup (5–20% Margin)

High volume, low margin businesses. Grocery stores operate on 1–3% net margins with markups of 5–25%. Wholesale distributors add 15–30% on top of manufacturer pricing.

How to Set the Right Markup

Choosing the right markup requires balancing profitability with market competitiveness. Consider these factors:

Cover all costs: Your markup must cover not just direct costs (COGS) but also overhead — rent, salaries, marketing, and R&D. Many businesses fail by marking up enough to cover COGS but not enough to cover total operating expenses.
Know your competition: Research what competitors charge for similar products. If your markup pushes your price well above the market, you need a clear differentiation story to justify the premium.
Consider perceived value: Customers pay based on the value they receive, not your cost. A SaaS tool that saves a company $100K per year can justify a $20K price tag regardless of the $2K delivery cost — that is a 900% markup driven by value, not cost.
Account for volume: Higher volume businesses can sustain lower markups because fixed costs are spread across more units. Lower volume businesses need higher markups to stay profitable.

Related SaaS Calculators

Markup is one piece of the pricing puzzle. Use these related calculators to understand your full business economics:

Financial Health

ARR Calculator — Calculate annual recurring revenue from monthly subscriptions and annual contracts
MRR Calculator — Break down new, expansion, contraction, and churned MRR
Churn Rate Calculator — Measure customer and revenue churn with annualized projections
NRR Calculator — Track net revenue retention and gross revenue retention rates
Burn Rate Calculator — Calculate net burn rate, cash runway, and burn multiple
Growth Rate Calculator — Calculate MoM, YoY, and CAGR growth rates from revenue data
Break-Even Calculator — Find the units and revenue needed to cover all costs and reach profitability

Customer Metrics

CAC Calculator — Measure customer acquisition cost and LTV:CAC ratio
LTV Calculator — Calculate customer lifetime value, lifespan, and LTV:CAC ratio
Payback Period Calculator — Calculate how long it takes to recover customer acquisition costs
Viral Coefficient Calculator — Measure your K-factor and model viral growth scenarios

Pricing & Valuation

SaaS Valuation Calculator — Estimate your company value using ARR multiples and growth-rate benchmarks
Equity Dilution Calculator — Model how funding rounds affect founder ownership over time

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Understand the full picture — from CAC to LTV to gross margin. Founderpath connects your pricing data with acquisition and retention metrics for a complete view.

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Frequently Asked Questions

Markup is the percentage added to the cost price of a product or service to determine its selling price.

Formula: Markup % = ((Selling Price - Cost) / Cost) × 100

For example, if a product costs $40 and you sell it for $60, the markup is 50% — you added half the cost on top.

Markup % = ((Selling Price - Cost) / Cost) × 100

Subtract the cost from the selling price to get profit
Divide profit by the cost
Multiply by 100 to get the percentage

Example: Cost is $80, selling price is $120. Profit = $40. Markup = ($40 / $80) × 100 = 50%.

Both measure profitability but use different denominators:

Markup: Profit as a percentage of cost — "How much did I add on top?"
Margin: Profit as a percentage of selling price — "What fraction of revenue is profit?"

A 50% markup equals a 33.3% margin. Markup is always higher than margin for the same transaction because cost is always smaller than selling price.

It depends on your industry:

SaaS / Software: 200–900% markup (70–90% margin)
Professional Services: 100–230% markup (50–70% margin)
Retail: 50–150% markup (30–60% margin)
Grocery / Wholesale: 5–30% markup (5–20% margin)

The right markup must cover all your costs — not just COGS, but overhead, marketing, and profit targets.

Margin = Markup / (1 + Markup), where both are expressed as decimals.

50% markup (0.50) → 0.50 / 1.50 = 33.3% margin
100% markup (1.00) → 1.00 / 2.00 = 50.0% margin

Going the other way: Markup = Margin / (1 - Margin). A 40% margin → 0.40 / 0.60 = 66.7% markup.

Selling Price = Cost × (1 + Markup % / 100)

Example: Your cost is $25 and you want a 60% markup:
Selling Price = $25 × (1 + 60/100) = $25 × 1.60 = $40
Your profit on each sale would be $15.