Markup

The amount added to the cost price of goods to cover overhead and create a profit.

Business2 min read

Definition

Markup is the percentage amount that a retailer adds to the wholesale cost of a product to determine its final selling price.

Why It Matters

Markup ensures that a business can cover its overhead costs (like rent, employee salaries, and marketing) and still make a profit on every item sold.

Crucial Warning: Markup is NOT the same thing as margin!

Confusing these two terms is one of the most expensive mistakes a business owner can make. Markup calculates profit as a percentage of your cost. Margin calculates profit as a percentage of your revenue. A 100% markup only yields a 50% profit margin.

Practical Example

Calculating Markup

You buy a blank t-shirt from a supplier for $10.

  • If you apply a 50% markup: 50% of $10 is $5. Your selling price is $15.
  • If you apply a 100% markup: 100% of $10 is $10. Your selling price is $20.

To safely price your products without messing up the math, use our Markup and Margin Calculator.

Frequently Asked Questions

Is 100% markup the same as 100% margin?

No. A 100% markup means you doubled the cost of the item, which results in a 50% profit margin.