Formula
\text{Markup} = \text{Selling Price} - \text{Cost}Used to calculate:
The amount added to the cost of an item to determine its selling price.
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What Is the Markup Formula?
The markup formula calculates the difference between an item’s selling price and its cost. Markup represents the amount added above cost and can be expressed as a monetary amount or as a percentage of cost.
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Formula and Variables
\text{Markup} = S - C| Symbol | Meaning | Unit |
| Selling price | Currency | |
| Cost | Currency | |
| Markup | Amount added above cost | Currency |
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How to Use the Formula
Identify the item’s cost and selling price. Subtract the cost from the selling price to determine the markup amount. To express markup as a percentage, divide the markup amount by the cost and multiply by 100.
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When Is This Formula Used?
The markup formula is used when determining how much an item’s selling price exceeds its cost.
Common uses:
– Setting retail and wholesale prices
– Measuring the amount added to product cost
– Comparing pricing strategies and markups
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Important Notes
– Markup amount is the difference between selling price and cost.
– For the standard markup-percentage formula, cost must be greater than zero because it is used as the denominator.
– Cost, selling price, and markup amount should use the same currency unit.
– A common point of confusion is treating markup percentage and profit margin as the same measure. Markup percentage is based on cost, while profit margin is generally based on selling price or revenue.
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Alternate Forms
Alternate form:
\text{Markup Percentage} = \frac{S-C}{C} \times 100\%Alternate form:
S = C(1+r)
Alternate form:
S = C\left(1+\frac{m}{100}\right)—
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