Internal Markup Calculator
Use this calculator to determine the selling price of an item or service based on its cost and a desired internal markup percentage. Internal markup is calculated as a percentage of the cost.
Enter the initial cost and the desired markup percentage. The tool will calculate the markup amount and the final selling price.
Enter Cost and Markup Percentage
Understanding Internal Markup
What is Markup?
Markup is the difference between the cost of a good or service and its selling price. When calculated as a percentage of the *cost*, it's often referred to as internal markup or simply 'markup percentage'. It's the amount added to the cost to cover overheads and generate profit.
Markup vs. Profit Margin
It's important not to confuse markup with profit margin. While both measure profitability, they use different bases:
- Markup: (Selling Price - Cost) / Cost * 100% (Percentage of **Cost**)
- Profit Margin: (Selling Price - Cost) / Selling Price * 100% (Percentage of **Selling Price**)
This calculator focuses on internal markup based on the cost.
Internal Markup Formulas
If you know the Cost and the desired Markup Percentage:
Markup Amount = Cost * (Markup Percentage / 100)
Selling Price = Cost + Markup Amount
Which simplifies to:
Selling Price = Cost * (1 + (Markup Percentage / 100))
If you know the Cost and the Selling Price, you can find the Markup Percentage:
Markup Percentage = ((Selling Price - Cost) / Cost) * 100
Internal Markup Calculation Examples
Explore these common scenarios to see how markup is calculated:
Example 1: Basic Markup (50%)
Scenario: You buy an item for $100 and want a 50% markup.
Knowns: Cost = $100, Markup Percentage = 50%.
Calculation:
- Markup Amount = $100 * (50 / 100) = $100 * 0.50 = $50
- Selling Price = $100 + $50 = $150
Result: Markup Amount = $50, Selling Price = $150.
Example 2: Doubling Cost (100% Markup)
Scenario: You want to sell an item for double its cost of $50.
Knowns: Cost = $50, Markup Percentage = 100%.
Calculation:
- Markup Amount = $50 * (100 / 100) = $50 * 1.00 = $50
- Selling Price = $50 + $50 = $100
Result: Markup Amount = $50, Selling Price = $100.
Example 3: Higher Markup (200%)
Scenario: An item costs you $25, and you apply a 200% markup.
Knowns: Cost = $25, Markup Percentage = 200%.
Calculation:
- Markup Amount = $25 * (200 / 100) = $25 * 2.00 = $50
- Selling Price = $25 + $50 = $75
Result: Markup Amount = $50, Selling Price = $75.
Example 4: Zero Markup
Scenario: You need to calculate the selling price with no markup on a $10 item.
Knowns: Cost = $10, Markup Percentage = 0%.
Calculation:
- Markup Amount = $10 * (0 / 100) = $10 * 0 = $0
- Selling Price = $10 + $0 = $10
Result: Markup Amount = $0, Selling Price = $10. (Selling at cost).
Example 5: Service Pricing
Scenario: A service costs your business $500 (including labor, materials). You want a 75% markup.
Knowns: Cost = $500, Markup Percentage = 75%.
Calculation:
- Markup Amount = $500 * (75 / 100) = $500 * 0.75 = $375
- Selling Price = $500 + $375 = $875
Result: Markup Amount = $375, Selling Price = $875.
Example 6: Decimal Markup
Scenario: An item costs $80. You apply a specific 35.5% markup.
Knowns: Cost = $80, Markup Percentage = 35.5%.
Calculation:
- Markup Amount = $80 * (35.5 / 100) = $80 * 0.355 = $28.40
- Selling Price = $80 + $28.40 = $108.40
Result: Markup Amount = $28.40, Selling Price = $108.40.
Example 7: Decimal Cost
Scenario: An item with a cost of $15.50 is marked up by 60%.
Knowns: Cost = $15.50, Markup Percentage = 60%.
Calculation:
- Markup Amount = $15.50 * (60 / 100) = $15.50 * 0.60 = $9.30
- Selling Price = $15.50 + $9.30 = $24.80
Result: Markup Amount = $9.30, Selling Price = $24.80.
Example 8: Small Cost Item
Scenario: A small component costs $0.50. You need a high markup of 150%.
Knowns: Cost = $0.50, Markup Percentage = 150%.
Calculation:
- Markup Amount = $0.50 * (150 / 100) = $0.50 * 1.50 = $0.75
- Selling Price = $0.50 + $0.75 = $1.25
Result: Markup Amount = $0.75, Selling Price = $1.25.
Example 9: High-Value Item
Scenario: A large piece of equipment costs $10,000. It has a 30% markup.
Knowns: Cost = $10,000, Markup Percentage = 30%.
Calculation:
- Markup Amount = $10,000 * (30 / 100) = $10,000 * 0.30 = $3,000
- Selling Price = $10,000 + $3,000 = $13,000
Result: Markup Amount = $3,000, Selling Price = $13,000.
Example 10: Markup Above 100%
Scenario: An item costs $20, and you apply a 400% markup (Selling price is 5x cost).
Knowns: Cost = $20, Markup Percentage = 400%.
Calculation:
- Markup Amount = $20 * (400 / 100) = $20 * 4.00 = $80
- Selling Price = $20 + $80 = $100
Result: Markup Amount = $80, Selling Price = $100.
Currency Formatting
The tool formats results using your browser's default locale settings for currency, typically showing two decimal places.
Frequently Asked Questions about Markup
1. What is internal markup?
Internal markup, or simply markup, is the percentage added to the cost of a product or service to determine its selling price. It's calculated based on the original cost.
2. How is markup different from profit margin?
Markup is calculated as a percentage of the *cost*, whereas profit margin is calculated as a percentage of the *selling price*. They measure the same profit amount but relative to different bases.
3. What is the formula for calculating markup amount?
Markup Amount = Cost × (Markup Percentage / 100).
4. What is the formula for calculating the selling price using markup?
Selling Price = Cost + Markup Amount, or simplified: Selling Price = Cost × (1 + (Markup Percentage / 100)).
5. Can the markup percentage be greater than 100%?
Yes, absolutely. A 100% markup means the selling price is double the cost. A 200% markup means the markup amount is twice the cost, making the selling price three times the cost, and so on.
6. Can the markup percentage be zero?
Yes, a 0% markup means the selling price is exactly the same as the cost. This is selling at cost and results in no profit.
7. What are the limitations on the input values?
Both the Cost and the Markup Percentage must be non-negative numbers (zero or greater).
8. Why would a business use markup instead of margin?
Markup is often easier to apply directly to product costs when sourcing or manufacturing. It's a straightforward way to calculate the addition needed on top of the cost price.
9. How do I calculate the markup percentage if I know the cost and selling price?
Markup Percentage = ((Selling Price - Cost) / Cost) × 100. You can use this formula if you want to work backward.
10. What units should I use for cost and selling price?
Use consistent currency units (like $, €, £) for both inputs. The calculated markup amount and selling price will be in the same currency unit.
