Calculate the markup percentage from cost and selling price

What markup percentage tells you

Markup percentage is the amount you add to cost, expressed as a fraction of that cost. If your item costs you 50 and you sell it for 75, the markup is 25 on a 50 base — a 50% markup. This is the most intuitive framing for pricing decisions in a cost-driven business. You know what you paid, you decide what to add, and the markup percentage is the single number that captures the relationship.

How the math works

Markup% = (Selling Price − Cost) ÷ Cost × 100. The gross profit is Selling Price − Cost, and the markup percentage expresses that profit relative to cost. The same profit can also be expressed relative to price, which gives you the margin percentage. Markup and margin describe the same dollars with different denominators — a 50% markup is a 33.3% margin, a 100% markup is a 50% margin, a 200% markup is a 66.7% margin.

Industry benchmarks

Typical markup ranges vary sharply by industry. Grocery retail runs 15-25% markup on most items with loss-leaders well below that. Clothing retail commonly runs 100-150% markup to cover inventory risk, unsold merchandise, and seasonality. Restaurants typically mark up ingredients 300-500% to cover labour, rent, and waste. Luxury goods mark up 500-1000% or more to support brand positioning and distribution. Software businesses have near-zero COGS per unit and effectively infinite markup on the raw math, which is why they get valued differently than product businesses. Knowing the benchmark for your space helps set realistic prices and flag when competitors are priced unusually high or low.

When markup alone does not tell the full story

A high markup percentage on low volume can still produce weak total profit. A small boutique with 200% markup selling 50 items a month makes less gross profit than a supermarket with 20% markup selling 50,000 items. Markup times volume is what pays the bills. Any pricing analysis that ignores volume risks optimising for the wrong variable — raising markup at the cost of killing demand is a common error in small businesses learning pricing.

Markup and discounts

Discount math interacts with markup in ways that are easy to get wrong. A 50% markup product has a 33.3% margin. Discount it 25% off the selling price, and gross profit drops dramatically — the margin becomes negative if you are not careful. A useful rule of thumb: a discount equal to the margin percentage brings gross profit to zero. Beyond that, you are selling below cost. Most retailers build in a higher initial markup precisely because some inventory will end up discounted — the full-price items subsidise the marked-down ones.