Accounting Glossary

How to calculate markup

 

Markup (calculation)

Markup is the difference between your buy and sell price divided by your buy price, times 100.

Example of a markup calculation

Let’s say you make sofas for $1000 and sell them for $1350, and want to know your markup. The calculation goes like this:

 

Using markup to set prices

Many businesses apply a set markup to inventory costs to arrive at a retail price. In that case, the equation works the other way around.

Example of a marked-up sales price calculation

Let’s say you make sofas and the cost to produce one is $1000. You’ve decided on a 35% markup:

 

 

 

 

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