How to Calculate Markup: Formula, Excel and Margin Math

Markup formula with a retail pricing example, the Excel formula per product, and how to convert between markup and margin without mispricing.

Summary

Markup = (Selling price − Cost) ÷ Cost. It measures how much you add on top of cost. A candle that costs $8.40 and sells for $22.00 has a 161.9% markup, which is a 61.8% margin. To price from a target markup, use Price = Cost × (1 + Markup).

On this page
  1. Markup formula
  2. How to calculate markup in Excel and Google Sheets
  3. Worked example
  4. How to interpret markup
  5. Common mistakes
  6. Calculate markup with Better Analyst
  7. Further reading
  8. FAQ

Markup formula

Formula
Markup % = (Selling price − Unit cost) ÷ Unit cost × 100
  • Selling price: The price the customer pays per unit, before sales tax.
  • Unit cost: What the unit costs you landed: wholesale or production cost plus inbound freight and duties.

How to calculate markup in Excel and Google Sheets

Excel, using the cells in the worked example below:

Excel
=(C2-B2)/B2

Worked example

A gift shop is reviewing prices on three best sellers after its supplier raised costs, and wants markup and margin side by side.

Unit cost and selling price (table starts in cell A1)
ProductUnit costSelling price
Soy candle$8.40$22.00
Ceramic mug$5.10$16.00
Canvas tote$6.75$18.00
  1. Candle markup = (22.00 − 8.40) ÷ 8.40 = 13.60 ÷ 8.40 = 161.9%.
  2. Candle margin = 13.60 ÷ 22.00 = 61.8%. Same $13.60 profit, different base.
  3. Fill =(C2-B2)/B2 down column D: mug 213.7%, tote 166.7%.
  4. To keep a 160% markup on the candle if cost rises to $9.20: price = 9.20 × (1 + 1.60) = $23.92.

Result: 161.9% markup on the soy candle (61.8% margin)

How to interpret markup

Markup is a pricing tool; margin is a profitability measure. Retailers often think in markup when setting prices ('keystone' pricing is a 100% markup, which equals a 50% margin), while finance reports margin. Convert between them with Margin = Markup ÷ (1 + Markup) and Markup = Margin ÷ (1 − Margin). A store that needs a 60% gross margin must mark up 150%, not 60%. Check realised markup after discounts, since a 20%-off sale on a 100% markup leaves only a 60% markup.

Common mistakes

  • Pricing with margin when you meant markup. Adding a 40% 'margin' to cost ($10 × 1.4 = $14) only yields a 28.6% margin.
  • Using supplier price instead of landed cost. Freight, duties and packaging can add several points of cost.
  • Averaging markup percentages across products with very different volumes. Weight by units or revenue.
  • Ignoring discounts. Report markup at the price customers actually paid, not the ticket price.

Calculate markup with Better Analyst

Connect your data or upload a spreadsheet, then ask in plain English. Better Analyst writes and runs the calculation and shows the steps, so you can check the number.

  • “Calculate markup and margin for every SKU in this price list and flag anything under 100% markup.”
  • “What prices keep a 150% markup after the new supplier costs?”
  • “Show realised markup by month after discounts.”

Usually calculated from: Google Sheets, Airtable, MySQL, PostgreSQL, Google BigQuery.

Try Better Analyst free

Further reading

Frequently asked questions

What is the difference between markup and margin?
Both use the same profit per unit (price − cost). Markup divides it by cost; margin divides it by price. A $10 item sold for $15 has a 50% markup and a 33.3% margin.
How do I convert margin to markup?
Markup = Margin ÷ (1 − Margin). A 40% margin is 0.40 ÷ 0.60 = 66.7% markup. The reverse is Margin = Markup ÷ (1 + Markup).
How do I set a price from a target markup in Excel?
Multiply cost by one plus the markup: =B2*(1+0.6) for a 60% markup. For a target margin instead, divide: =B2/(1-0.4) for a 40% margin.