Use this markup calculator to easily calculate your markup, your gross profit or the revenue required to achieve a given markup. Enter the cost and either the total revenue, the gross profit or the markup percentage to calculate the remaining two.
- How to use the Markup Calculator?
- What is markup?
- Markup Formula
- How to calculate your markup?
- Markup vs margin?
How to use the Markup Calculator?
This versatile markup calculator will help you calculate:
- profit, markup and profit margin given cost and gross revenue.
- revenue, markup and margin given cost and gross profit.
- revenue, profit and margin given the cost and the markup.
Simply enter the cost and the other business metric depending on the desired output and press "Calculate". You can copy/paste the results easily using the clipboard icon next to each value.
What is markup?
In business, markup is the ratio between the cost of a good or service and its final selling price. Usually it is expressed as a percentage increase over the cost. There is markup in every transaction as this is the sum from which the producer or reseller needs to cover their costs of doing business as well as create a profit. Usually when calculating the markup one takes as cost the total amount of fixed and variable expenses to produce and distribute the product or service. For example, in retail businesses the markup is calculated as the percentage difference between the retail price and the wholesale price.
Markup figures are often used in political campaigns aimed at increasing regulation for certain businesses or industries, with claims often made against the absolute or relative value of the markup. What these campaigns often "forget" to mention is that the markup is not how much the business makes in profit. In fact, even a business with a very high markup may not be able to cover its expenses ones taxes, interest rates on debts and other expenses are included. Oftentimes the markup cited will only include variable costs and not include costs such as rent, depreciation, maintenance, and others. Keep that in mind when interpreting the results from the calculator.
The formula for markup in a price is:
Markup = Revenue / Cost
Revenue stands for your total sales. Both input values are in the relevant currency while the resulting markup is a ratio which can be converted to a percentage by multiplying the result by 100. This formula is used in our tool.
How to calculate your markup?
Knowing the formula above, you should start with estimating the cost of production, which includes all variable and fixed costs of producing the goods or services the business sells. When calculating for a past period, you already know the gross revenue that was made by selling the goods or services so simply plug in the numbers in formula. For example, if the costs are $100,000 and the revenue is $120,000 the equation becomes: Markup = 120,000 / 100,000 - 1 = 6/5 - 5/5 = 1/5 which is the margin ratio telling you that for every 5 dollars in sales the business pockets 1 dollar in after accounting for costs. To convert to percentage, multiply by 100: 1/5 * 100 = 20% markup.
If you know only the cost and the profit, simply add the two together to get the revenue, then substitute in the same equation. If what you want to calculate is the profit and/or revenue required to achieve a given markup, then simply input the cost and the markup percentage in our markup calculator.
Markup vs margin?
The two metrics are sometimes confused, but they are quite different. Whereas the markup is the percentage difference between your costs and your revenue, the margin is the percentage difference between your profits and your revenue. Markup is useful when you need to estimate how much you are charging over costs, while margin is useful to estimate what proportion of your revenue ends up as profit (net income).
Cite this calculator & page
If you'd like to cite this online calculator resource and information as provided on the page, you can use the following citation:
Georgiev G.Z., "Markup Calculator", [online] Available at: https://www.gigacalculator.com/calculators/markup-calculator.php URL [Accessed Date: 22 Oct, 2021].