Formula
Markup = (Selling price − Unit cost) ÷ Unit cost × 100Markup formula
Markup expresses unit profit relative to unit cost. A product costing $40 and selling for $70 has $30 unit profit and a 75% markup: 30 ÷ 40 × 100.
Include the right cost
Depending on the decision, unit cost may include purchase cost, packaging, inbound freight, transaction fees and fulfillment. An incomplete cost base creates an inflated markup.
Convert markup to margin
The same example has a 42.86% gross margin because margin uses the $70 selling price as its denominator. Always identify which metric a pricing rule uses.
Assumptions
- Unit cost includes the variable costs you intend to recover.
Sources and methodology
CalcMotive publishes the formula and assumptions so you can decide whether the estimate fits your use case. See our methodology standards.