Internal Markup Calculator
Use this tool to calculate the selling price and the monetary markup amount for a product or service based on its cost and a desired markup percentage.
Enter the **Cost** and the desired **Markup Percentage**. The calculator will determine the Selling Price and the actual Markup Amount in the same currency/units as the cost.
Enter Cost and Markup
Understanding Internal Markup
What is Markup?
Markup is the difference between the cost of a good or service and its selling price. It is usually expressed as a percentage of the cost. Markup is added to the cost to cover business expenses and generate profit.
Markup vs. Margin (Important Distinction)
It's crucial not to confuse **markup** with **profit margin**. While both relate to profitability, they are calculated differently:
- **Markup Percentage:** (Selling Price - Cost) / Cost × 100
- **Profit Margin Percentage:** (Selling Price - Cost) / Selling Price × 100
Markup is based on the cost, while margin is based on the selling price. This tool calculates based on **markup percentage** applied to the cost.
The Formulas
The calculations used by this tool are:
Markup Amount = Cost × (Markup % / 100)
Selling Price = Cost + Markup Amount
Substituting the first into the second gives:
Selling Price = Cost + (Cost × (Markup % / 100))
Which can be simplified to:
Selling Price = Cost × (1 + (Markup % / 100))
Example Calculation
If your cost is $50 and you want a 60% markup:
Markup Amount = $50 × (60 / 100) = $50 × 0.60 = $30
Selling Price = $50 + $30 = $80
Alternatively, using the simplified formula:
Selling Price = $50 × (1 + (60 / 100)) = $50 × (1 + 0.60) = $50 × 1.60 = $80
Examples of Markup Calculation
Click on an example to see the inputs and results:
Example 1: Standard Retail Markup
Scenario: A store buys a product for $25 and wants a 100% markup.
Inputs: Cost = 25, Markup Percentage = 100
Calculation:
Markup Amount = 25 × (100 / 100) = 25 × 1 = 25
Selling Price = 25 + 25 = 50
Results: Markup Amount = $25.00, Selling Price = $50.00
Example 2: Small Business Markup
Scenario: A freelancer's time cost for a project is $300. They need a 50% markup for overhead and profit.
Inputs: Cost = 300, Markup Percentage = 50
Calculation:
Markup Amount = 300 × (50 / 100) = 300 × 0.50 = 150
Selling Price = 300 + 150 = 450
Results: Markup Amount = $150.00, Selling Price = $450.00
Example 3: Low Markup Scenario
Scenario: Selling a high-volume item with a cost of $5 and a low markup of 20%.
Inputs: Cost = 5, Markup Percentage = 20
Calculation:
Markup Amount = 5 × (20 / 100) = 5 × 0.20 = 1
Selling Price = 5 + 1 = 6
Results: Markup Amount = $1.00, Selling Price = $6.00
Example 4: High Markup Scenario
Scenario: A specialized service costs $1000 to provide but has a 300% markup due to expertise and demand.
Inputs: Cost = 1000, Markup Percentage = 300
Calculation:
Markup Amount = 1000 × (300 / 100) = 1000 × 3 = 3000
Selling Price = 1000 + 3000 = 4000
Results: Markup Amount = $3000.00, Selling Price = $4000.00
Example 5: Zero Markup
Scenario: Selling an item exactly at cost (0% markup).
Inputs: Cost = 75, Markup Percentage = 0
Calculation:
Markup Amount = 75 × (0 / 100) = 75 × 0 = 0
Selling Price = 75 + 0 = 75
Results: Markup Amount = $0.00, Selling Price = $75.00
Example 6: Markup with Decimals
Scenario: An item costs $12.50 and you apply a 75% markup.
Inputs: Cost = 12.50, Markup Percentage = 75
Calculation:
Markup Amount = 12.50 × (75 / 100) = 12.50 × 0.75 = 9.375
Selling Price = 12.50 + 9.375 = 21.875
Results: Markup Amount = $9.38, Selling Price = $21.88 (Rounded to 2 decimal places)
Example 7: Service Cost Markup
Scenario: The direct cost for a service is $150, marked up by 80%.
Inputs: Cost = 150, Markup Percentage = 80
Calculation:
Markup Amount = 150 × (80 / 100) = 150 × 0.80 = 120
Selling Price = 150 + 120 = 270
Results: Markup Amount = $120.00, Selling Price = $270.00
Example 8: Bulk Item Markup
Scenario: A bulk item costs $0.75 each, marked up by 150%.
Inputs: Cost = 0.75, Markup Percentage = 150
Calculation:
Markup Amount = 0.75 × (150 / 100) = 0.75 × 1.50 = 1.125
Selling Price = 0.75 + 1.125 = 1.875
Results: Markup Amount = $1.13, Selling Price = $1.88 (Rounded to 2 decimal places)
Example 9: Large Equipment Markup
Scenario: A piece of equipment costs $15000, marked up by 30%.
Inputs: Cost = 15000, Markup Percentage = 30
Calculation:
Markup Amount = 15000 × (30 / 100) = 15000 × 0.30 = 4500
Selling Price = 15000 + 4500 = 19500
Results: Markup Amount = $4500.00, Selling Price = $19500.00
Example 10: Markup with Decimal Percentage
Scenario: An item costs $80, marked up by 62.5%.
Inputs: Cost = 80, Markup Percentage = 62.5
Calculation:
Markup Amount = 80 × (62.5 / 100) = 80 × 0.625 = 50
Selling Price = 80 + 50 = 130
Results: Markup Amount = $50.00, Selling Price = $130.00
Frequently Asked Questions about Internal Markup
1. What is internal markup?
Internal markup is the amount added to the cost of a product or service to arrive at the selling price. It's usually expressed as a percentage of the original cost.
2. How is markup percentage calculated?
Markup Percentage = ((Selling Price - Cost) / Cost) * 100%. This tool works the other way, calculating the selling price *from* a given cost and desired markup percentage.
3. What's the difference between markup and margin?
Markup is calculated based on the **cost** (Markup = (Selling Price - Cost) / Cost). Margin (or profit margin) is calculated based on the **selling price** (Margin = (Selling Price - Cost) / Selling Price). They are different ways of looking at profitability relative to either the cost or the revenue.
4. Why would I use markup instead of margin?
Markup is often simpler for businesses to calculate when pricing products based on how much they paid for them. You know your cost, decide your desired return relative to that cost (markup), and set the price. Margin is useful for analyzing overall profitability relative to sales revenue.
5. What are the inputs for this calculator?
The basic inputs are the **Cost** of the item or service and the desired **Markup Percentage** you want to add to that cost.
6. What does this calculator output?
The calculator outputs the monetary **Markup Amount** (Cost × Markup %) and the final **Selling Price** (Cost + Markup Amount).
7. Can I enter a markup percentage over 100%?
Yes, absolutely. A 100% markup means the selling price is double the cost. Markups of several hundred percent are common in certain industries (e.g., jewelry, software, specialized services).
8. What units should I use for the cost?
You can use any currency ($, €, £, etc.) or generic units for cost. The Markup Amount and Selling Price results will be in the same units. The Markup Percentage is just a number.
9. Does this calculator account for taxes or other fees?
No, this calculator performs a basic markup calculation based purely on cost and markup percentage. It does not include sales tax, VAT, shipping fees, or other potential additions to the final customer price. You would typically add these on top of the calculated selling price.
10. What happens if I enter zero for the cost or markup?
If the cost is zero or the markup percentage is zero, the calculator will correctly output a markup amount of zero and a selling price equal to the cost (or zero if cost is zero). The inputs must be non-negative numbers.
