Markup percentage measures the increase above an included cost base. Use the calculator below to compare a selling price with its cost, including a documented discount or extra expense.
Open the Profit Percentage Calculator.
How to calculate markup percentage from cost and selling price
Subtract the included cost from the actual selling price, divide the difference by that cost, and multiply by 100. The denominator is cost. This choice distinguishes markup from profit margin, which uses sales revenue as its denominator.
Markup percentage = (net selling price − included cost) ÷ included cost × 100.
If a product costs $48 and sells for $72, the difference is $24. Dividing $24 by $48 gives 0.5, so the markup is 50%. The same $24 represents only one-third of the $72 selling price. Its sales margin is therefore approximately 33.33%.
Keep the cost and price on the same basis. A price including collected sales tax is not directly comparable with a tax-exclusive cost figure. Remove any amount collected on behalf of a tax authority before using it as business revenue. Whether purchase taxes belong in cost depends on the applicable treatment and your accounting records; the calculator does not determine that treatment.
The Business Queensland explanation of profit distinguishes revenue from the costs paid out of it. Markup is one way to express the difference, but it is not evidence that all business expenses have been recovered.
Choose the cost base before entering a percentage
For a simple resale example, the cost base might contain the product purchase price plus its allocated inbound shipping. For a made-to-order item, it might include materials and measured production labor. Choose the boundary first, then apply it consistently to every item in the comparison.
Suppose a supplier charges $40 for a component and the actual shipping allocation is $8 per component. If you choose an acquisition-cost basis, the denominator is $48. Calculating markup on the $40 invoice alone produces a different answer, even though the transaction has not changed.
A cost allocation is not automatically another cash payment. If shipping is already included in the product cost exported from your inventory system, adding it again under extra expenses duplicates it. Keep a short list showing each included category and where it appears in the inputs.
Shared overhead needs a stated allocation method. Dividing a monthly warehouse bill by expected units is a planning assumption. Dividing it by actual units is an allocation based on observed output. Neither should be presented as an immutable property of the product.
Use the same quantity boundary as well. A $72 unit selling price cannot be compared directly with the $480 cost of a ten-unit case. Convert both to one unit, or enter compatible totals for the whole order.
Enter discounts and extra expenses correctly
The embedded Profit Percentage Calculator uses a cost-based percentage. Despite its broad name, its denominator is cost price plus extra expenses. It calculates markup on that combined base; its result is not a revenue-based net profit margin.
Enter the undiscounted selling amount in Selling Price and a currency amount in Discount Given. A $12 discount is entered as 12. A 12% discount on a $100 price also happens to be $12, but a 12% discount on $80 is $9.60. Convert the percentage into money before entering it in this field.
Use Extra Expenses only for costs not already contained in Cost Price. Leave it at zero if the chosen cost figure already includes everything within your analysis boundary. The tool subtracts the discount from selling price and adds extra expenses to cost before calculating the percentage.
For a worked example, enter cost price $40, extra expenses $8, selling price $80, and discount given $8. Actual proceeds are $72, combined cost is $48, and the resulting markup is 50%. This reproduces the same transaction described earlier without hiding the shipping or discount.
Do not leave a sample discount in place when checking a full-price transaction. Record the values used beside the result so that a colleague can reproduce it later.
Compare markup scenarios with the same denominator
This table holds the included cost at $48 and varies actual proceeds. It uses hypothetical prices, not a recommendation about what customers will pay.
| Actual selling price | Included cost | Difference above cost | Markup on cost | Margin on selling price |
|---|---|---|---|---|
| $48 | $48 | $0 | 0% | 0% |
| $60 | $48 | $12 | 25% | 20% |
| $72 | $48 | $24 | 50% | 33.33% |
| $96 | $48 | $48 | 100% | 50% |
A 100% markup doubles cost; it does not produce a 100% profit margin. At the $96 selling price, half the revenue pays the $48 included cost. Only the other half remains before any excluded expenses.
To calculate a selling price from a markup, reverse the relationship: price = included cost × (1 + markup percentage ÷ 100). A 25% markup on $48 gives $48 × 1.25 = $60. Enter $60 as proceeds to verify that the original percentage returns.
When prices are rounded, recalculate the actual markup. A planned $59.50 selling price does not have exactly the same markup as $60. The market-facing price is the number that belongs in the final comparison.
Handle loss-making sales and zero-cost cases
A selling price below cost produces a negative markup. If the included cost remains $48 and the selling price falls to $36, the difference is −$12. Dividing by $48 gives −25%. The sale recovers 75% of that particular cost base.
That result does not mean the business has a negative 25% sales margin. Dividing the same loss by $36 revenue produces approximately −33.33%. Keep the denominator visible when describing an unfavorable result, just as you would for a profitable sale.
A zero cost base cannot support this percentage calculation. Dividing by zero is undefined. An item obtained without a purchase charge may still incur handling or delivery costs, but inventing a token cost just to obtain a percentage makes the result misleading.
Returns, refunds, and multi-item offers can also change proceeds. Allocate a bundle discount consistently before comparing individual products. If the analysis concerns the entire bundle, use its combined proceeds and combined included cost instead of an arbitrary allocation among its components.
Markup cannot tell you whether a price is competitive or whether customers will buy at that price. It reports the relationship between the figures entered.
Check whether the remaining amount covers the business
After calculating markup percentage, identify the costs outside the chosen base. A $24 difference per unit may still need to pay for customer support, premises, payment processing, advertising, interest, and tax. Do not label that difference final net profit when those amounts remain unaccounted for.
The SEC guide to financial statements describes the progression from revenue through expenses on an income statement. Use that broader reconciliation when you need a business profitability figure rather than a product pricing ratio.
For an order containing several products, add their actual proceeds and included costs before calculating the combined markup. A simple average of individual markup percentages gives equal weight to a small item and a much larger item, which can distort the order result.
Keep the invoice date, unit quantity, cost categories, discount amount, tax basis, and rounding convention with your calculation. These details make it possible to distinguish a genuine pricing change from a changed accounting boundary. When you next calculate markup percentage, compare like with like before interpreting the movement.