Markup Calculator
Enter cost and selling price to find the markup percentage — and the gross margin it works out to, side by side.
On £100.00 of revenue with £60.00 of cost, the profit is £40.00. That's a markup of 66.67% — and an equivalent gross margin of 40.00%.
Results update as you type.
Formula
Markup is profit as a percentage of cost:
markup% = (revenue − cost) / cost × 100.
To go the other way — set a price from a target markup —
price = cost × (1 + markup%/100).
The equivalent gross margin is always smaller because it divides by the larger number:
margin% = markup% / (1 + markup%/100).
When this calculator helps
Pricing is the lever that decides whether a product line is worth stocking, and most UK retailers, wholesalers and makers set prices the same intuitive way: take what an item costs them and add a percentage on top. This calculator is for exactly that moment — you know the landed cost of a product and you want to set a selling price that builds in the profit you need to run the business.
It suits anyone deciding what to charge: a market trader pricing a craft line, an independent shop marking up stock from a distributor, an e-commerce seller costing a new SKU, or a tradesperson adding a margin to materials. Because markup is the figure suppliers and buyers in the UK trade actually talk in, working in markup keeps you speaking the same language as the rest of your supply chain.
How to read your result
The two outputs to focus on are the selling price and the cash profit per unit. The selling price is your cost with the markup added; the profit is the difference between that price and the cost — the gross amount that has to cover everything else before you keep anything.
The trap is confusing markup with margin, and they are not the same number. Markup expresses profit as a percentage of cost, so a £40 profit on a £60 cost is a 66.67% markup. Margin expresses that same £40 profit as a percentage of the selling price, so on a £100 price it is a 40% margin. Markup is always the larger figure on a profitable item. To convert, use margin% = markup% / (1 + markup%/100) — a 50% markup is a 33.33% margin.
A worked example
Say you buy a homeware item from a wholesaler for £24 ex-VAT and apply a 75% markup. The markup adds £18, giving a selling price of £42 before VAT. That £18 is your gross profit per unit — it has to absorb your shop rent, card fees, packaging and your time before any of it is real profit. Expressed as margin, the same £18 on a £42 price is roughly 43%, which is the figure you'd quote in your accounts even though you priced it as a 75% markup.
Common mistakes to avoid
Most markup errors come from mixing up which number you're working with, or from feeding the calculator figures that include things they shouldn't.
- Confusing markup with margin — treating a '40% markup' as if it gives a 40% margin leaves real money on the table.
- Marking up a price that already includes VAT, which inflates the apparent markup by roughly the VAT rate.
- Forgetting that gross profit isn't take-home profit — rent, wages, fees and shrinkage all come out of it before you keep anything.
- Copying a competitor's markup without checking their cost base is anything like yours.
Markup and VAT in the UK
In the UK, markup is calculated on the ex-VAT cost, and VAT is added to the selling price separately at checkout — it is never part of your markup. If you are VAT-registered, the 20% standard-rate VAT you charge customers belongs to HMRC, not to you, so including it in your selling price when working out markup will overstate your profit badly. Always strip VAT out of both cost and price first so the markup reflects money you actually keep.
Watch the edge cases too: some goods are zero-rated or reduced-rated (children's clothing, most food, domestic energy), and if you trade below the VAT registration threshold you may not charge VAT at all. Either way, keep the markup calculation on net figures and treat VAT as a separate line so your pricing stays honest about real margin.
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Frequently asked questions
What is markup?▾
Markup is the percentage you've added on top of your cost to set the selling price. If you buy something for £60 and sell it for £100, you've marked it up by £40 / £60 = 66.67%. It's how retailers price intuitively: 'cost plus 50%' or 'keystone' (which is double cost — a 100% markup, equivalent to a 50% margin).
Markup or margin — which one should I use?▾
Both, for different jobs. Markup is the input you control: 'I'll mark this up by 50% to set the price.' Margin is what the result actually means at the headline level: 'this product runs a 33.33% gross margin.' Internally you might price by markup; reporting and benchmarking happen in margin terms. The two diverge: 25% markup is only 20% margin, 50% markup is 33.33% margin, 100% markup is 50% margin.
How do I price for a target markup?▾
price = cost × (1 + markup%/100). For 50% markup on £70 cost: 70 × 1.50 = £105 selling price. This calculator works the inverse — given cost and price, what's the markup — but the formula is rearrangeable.
Why is my markup higher than my margin for the same product?▾
Always — except at zero. Markup divides by cost (the smaller number); margin divides by revenue (the larger number). So markup is always the bigger percentage on a profitable product. The conversion is margin% = markup% / (1 + markup%/100). It's what trips up newcomers most often.
Does VAT affect markup?▾
Use net-of-VAT figures for both cost and price for the calculation to be meaningful. If you're VAT-registered, the 20% you collect is the tax authority's, not your markup. If you mistakenly include VAT in the revenue but not the cost, you'll show an inflated markup of roughly 20 percentage points.